Informist, Tuesday, Mar 28, 2023

By Parth Singh and Subhana Shaikh

NEW DELHI – Yields on corporate bonds ended on a mixed note in the secondary market today with yields on three-year papers rising on the back of selling by mutual funds, while those on 10-year bonds fell on buying by banks and insurance companies ahead of the end of the current financial year, dealers said. Yields on five-year papers ended steady due to lack of major domestic cues.

"...market is not gung-ho right now. People are switching money from shorter-end to other buckets because of redemption pressures. Somewhat window dressing here and there has happened and flows are getting exchanged," a fund manager with a large-sized fund house said.

In mutual funds, window dressing refers to the superficial changes a fund might make to its portfolio of holdings to appear more attractive to current and prospective investors. 

Some banks, insurance companies, and a handful of mutual funds were said to have been buying 10-year corporate bonds, while mainly mutual funds were seen selling three-year papers because of continuos year-end pressure on their books, dealers said.

"Due to financial year-end, investors are fine-tuning their books by trading in the short-term segment," a fund manager with a brokerage firm said.

Bonds issued by Housing Development Finance Corp, Rural Electrification Corp, Indian Railway Finance Corp, SBI, Andhra Pradesh State Beverages Corp, Power Finance Corp, Nuclear Power Corp of India, and National Bank for Agriculture and Rural Development were traded the most across tenures in the secondary market today.

Market participants are waiting for the outcome of the Reserve Bank of India's monetary policy decision week. "Some section of the market is now inclined towards the belief that the RBI may go for a pause next week, so there is clearly a division of thoughts among investors," another fund manager said.

Market participants are divided on the outcome of the central bank's interest rate hike decision between a 25-basis point hike or a pause on Apr 6. The split in opinions is expected to be a trigger for the market next week, dealers said.

There was a pick-up in the volume today. As of 1500 IST, deals aggregating 88 bln rupees were recorded on the National Stock Exchange and BSE combined against 52.29 bln rupees on Monday.

So far, corporate bonds have not yet seen much action from mutual funds after the finance ministry last week moved an amendment to Finance Bill 2023, removing long-term capital gains and indexation benefits on income from debt mutual fund schemes.

According to the amendment, after Apr 1, investments in debt mutual funds will be taxed at the respective tax slab of the investor.

Currently, capital gains arising from transfer of mutual fund units, other than equity-oriented funds, held for more than three years are considered long term, and are taxed at 20% with indexation benefit.

"As of now, the reaction was seen on sovereign products and not on the corporate bond side," the fund manager said.

In the primary market today, frequent issuer NABARD raised 8.6 bln rupees through bonds maturing in 15 years, at a coupon of 7.78%. The issue was fully subscribed.

Power Finance Corp plans to raise up to 50 bln rupees through two bonds, one maturing in five years and 15 days, and the other in three years, five months and 15 days. Bidding for the bonds is scheduled on Wednesday. 

According to merchant bankers, some private lending companies are likely to tap the primary market soon.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 191 mln rupees were traded at a weighted average yield of 7.67-7.75%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

* 40 mln rupees of Uttar Pradesh's 2030 bonds were traded at 7.75%

* 33 mln rupees of Chhattisgarh's bonds were traded at 7.74%

* 50 mln rupees of Telangana's 2027–32 bonds were traded at 7.71-7.75%

* 30 mln rupees of Haryana's 2025–26 bonds were traded at 7.72%

* 15 mln rupees of Punjab's 2030 bonds were traded at 7.69%

* 23.88 mln rupees of Tamil Nadu's 2030–32 bonds were traded at 7.67-7.72%

BENCHMARK LEVELS FOR CORPORATE BONDS:

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

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.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.

Informist, Tuesday, Mar 28, 2023

By Parth Singh and Subhana Shaikh

NEW DELHI – Yields on corporate bonds ended on a mixed note in the secondary market today with yields on three-year papers rising on the back of selling by mutual funds, while those on 10-year bonds fell on buying by banks and insurance companies ahead of the end of the current financial year, dealers said. Yields on five-year papers ended steady due to lack of major domestic cues.

"...market is not gung-ho right now. People are switching money from shorter-end to other buckets because of redemption pressures. Somewhat window dressing here and there has happened and flows are getting exchanged," a fund manager with a large-sized fund house said.

In mutual funds, window dressing refers to the superficial changes a fund might make to its portfolio of holdings to appear more attractive to current and prospective investors. 

Some banks, insurance companies, and a handful of mutual funds were said to have been buying 10-year corporate bonds, while mainly mutual funds were seen selling three-year papers because of continuos year-end pressure on their books, dealers said.

"Due to financial year-end, investors are fine-tuning their books by trading in the short-term segment," a fund manager with a brokerage firm said.

Bonds issued by Housing Development Finance Corp, Rural Electrification Corp, Indian Railway Finance Corp, SBI, Andhra Pradesh State Beverages Corp, Power Finance Corp, Nuclear Power Corp of India, and National Bank for Agriculture and Rural Development were traded the most across tenures in the secondary market today.

Market participants are waiting for the outcome of the Reserve Bank of India's monetary policy decision week. "Some section of the market is now inclined towards the belief that the RBI may go for a pause next week, so there is clearly a division of thoughts among investors," another fund manager said.

Market participants are divided on the outcome of the central bank's interest rate hike decision between a 25-basis point hike or a pause on Apr 6. The split in opinions is expected to be a trigger for the market next week, dealers said.

There was a pick-up in the volume today. As of 1500 IST, deals aggregating 88 bln rupees were recorded on the National Stock Exchange and BSE combined against 52.29 bln rupees on Monday.

So far, corporate bonds have not yet seen much action from mutual funds after the finance ministry last week moved an amendment to Finance Bill 2023, removing long-term capital gains and indexation benefits on income from debt mutual fund schemes.

According to the amendment, after Apr 1, investments in debt mutual funds will be taxed at the respective tax slab of the investor.

Currently, capital gains arising from transfer of mutual fund units, other than equity-oriented funds, held for more than three years are considered long term, and are taxed at 20% with indexation benefit.

"As of now, the reaction was seen on sovereign products and not on the corporate bond side," the fund manager said.

In the primary market today, frequent issuer NABARD raised 8.6 bln rupees through bonds maturing in 15 years, at a coupon of 7.78%. The issue was fully subscribed.

Power Finance Corp plans to raise up to 50 bln rupees through two bonds, one maturing in five years and 15 days, and the other in three years, five months and 15 days. Bidding for the bonds is scheduled on Wednesday. 

According to merchant bankers, some private lending companies are likely to tap the primary market soon.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 191 mln rupees were traded at a weighted average yield of 7.67-7.75%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

* 40 mln rupees of Uttar Pradesh's 2030 bonds were traded at 7.75%

* 33 mln rupees of Chhattisgarh's bonds were traded at 7.74%

* 50 mln rupees of Telangana's 2027–32 bonds were traded at 7.71-7.75%

* 30 mln rupees of Haryana's 2025–26 bonds were traded at 7.72%

* 15 mln rupees of Punjab's 2030 bonds were traded at 7.69%

* 23.88 mln rupees of Tamil Nadu's 2030–32 bonds were traded at 7.67-7.72%

BENCHMARK LEVELS FOR CORPORATE BONDS:

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

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.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.