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India Corporate Bonds: Yields flat as most investors on sidelines

Informist, Tuesday, Sep 5, 2023

 

By Asmita Patil

 

MUMBAI – Yields on corporate bonds remained steady in the secondary market today as most investors stayed on the sidelines due to lack of significant domestic cues, dealers said.

 

"Activity remained dull today because even underlying g-sec (government securities market) is not offering any cues," said a debt fund manager with a mid-sized mutual fund house.

 

Yield on 10-year benchmark government bond ended at 7.2068%, compared to 7.2047% on Monday.

 

A few mutual fund houses were active in the secondary market, but the trade was restricted to the shorter end of the curve, dealers said.

 

"Mutual funds are not getting flows, and they don't have a view to deploy whatever funds that are there," said a dealer with a mid-sized brokerage firm.

 

According to the Association of Mutual Funds in India, mutual funds saw net inflows of 614.40 bln rupees in July, of which only 6.48 bln rupees were in corporate bond funds.

 

Lack of investor participation kept trade volume subdued, with the turnover on the National Stock Exchange and BSE combined at 40.57 bln rupees, as against 45.13 bln rupees on Monday.

 

Papers of REC, National Bank for Agriculture and Rural Development, Andhra Pradesh State Beverages Corp, HDFC Bank, Power Grid Corp, Small Industries Development Bank of India, and Indiabulls Housing Finance were traded.

 

Issuances in the primary market have been muted since past few days.

 

"Issuers are delaying their bond offerings as far as possible with a view that yields will fall in future. They are managing with the help of short-term (debt) or maybe they are using their bank lines efficiently," said a senior official with a mid-sized mutual fund house.

 

According to merchant bankers, primary market may gain traction next week as some non-banking finance companies are in the pipeline to tap the market.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 762.60 mln rupees were traded at a weighted average yield of 7.2550-7.7899%, according to data from the Reserve Bank of India's Negotiated Dealing System-Order Matching System.

 

* 54.5 mln rupees of Tamil Nadu's 2025–27 bonds were traded at 7.5200%

* 2 mln rupees of Telangana's 2029 bonds were traded at 7.4946%

* 555.60 rupees of Haryana's 2024–2026 bonds were traded at 7.2550-7.5200%

* 32 mln rupees of Jharkhand's 2026 bonds were traded at 7.5200%

* 70 mln rupees of Rajasthan's 2022–26 bonds were traded at 7.5200-7.5700%

* 48.50 mln rupees of Chhattisgarh's 2024 bonds were traded at 7.7899%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

TENURES

TODAY

MONDAY

Three-year

7.64-7.66%7.64-7.65%

Five-year

7.64-7.65%7.64-7.65%

10-year

7.60-7.62%7.59-7.62%

 

End

 

Edited by Ashish Shirke

 

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Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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