Informist, Monday, Feb 12, 2024

By Abhinaba Saha

MUMBAI – Yields on corporate bonds ended steady in the secondary market today as market participants avoided taking large bets ahead of India's CPI data for January, released after market hours today, dealers said. A few mutual funds and some pension funds and insurance companies were active in the market. Limited participation kept trade volume muted. 

Today, deals worth 46.17 bln rupees were recorded on the BSE and the National Stock Exchange combined, against 45.81 bln rupees on Friday. Papers issued by Housing and Urban Development Corp, HDFC Bank, MSRDC Sea Link, Cholamandalam Investment and Finance Co, Muthoot Finance, Small Industries Development Bank of India, and National Bank For Agriculture And Rural Development were traded the most today.

"Everyone is engaging in requirement-based trading. Deals are scattered across all class of investors and there is not much volume today. Possibly people are waiting for CPI," a fixed income dealer at a small brokerage house said.  

Data released post market hours showed India's CPI moderated to a three-month low of 5.1% in January from 5.69% in December, in line with expectations of economists polled by Informist. Core inflation, which excludes the volatile segments of fuel and food, fell to a 50-month low of 3.6% in January from 3.9% in December. This is the second straight month when core inflation has stayed below 4% after remaining above the mark for four years.

"People are fairly comfortable as far as the underlying macroeconomic dynamics are concerned, including CPI today. It is just a phase of consolidation from here," Suyash Choudhary, head of fixed income, Bandhan Mutual Fund said.

The Reserve Bank of India retained India's inflation forecast for 2023-24 (Apr-Mar) at 5.4% and pegged the GDP growth forecast for 2024-25 at 7% last week, indicating confidence in the domestic economy. Amid overall positive sentiment, demand for corporate bond remains firm across tenures as investors are deploying funds to meet their targets, market participants said. 

In the primary market today, Canara Bank raised 20 bln rupees by issuing Basel-III-compliant tier-I bonds at a coupon of 8.40%. Frequent issuer NABARD will reissue its Mar 15, 2027 bonds to raise up to 50 bln rupees on Tuesday.

Kotak Mahindra Bank plans to raise up to 10 bln rupees through infrastructure bonds maturing in seven years, and has invited bids on Tuesday. Market participants expect the cut-off to be 7.60-7.70%.

Aditya Birla Finance plans to raise up to 7.5 bln rupees through bonds maturing in five years at a fixed coupon of 8.16%. Power Finance Corp looks to raise up to 5 bln rupees through perpetual bonds, while NIIF Infrastructure Finance will reissue its Jan 24, 2039 bonds to raise up to 4 bln rupees. All have invited bids on Tuesday. Additionally, Motilal Oswal Finvest and 360 One Prime will tap the debt market on Tuesday. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 105 mln rupees were traded at a weighted average yield of 7.5084-7.6356%, according to data from the Reserve Bank of India's Negotiated Dealing System-Order Matching Segment.

* 100.00 mln rupees of Haryana's March 2025 bonds were traded at 7.5084%

* 5.00 mln rupees of Rajasthan's March 2026 bonds were traded at 7.6356% 

BENCHMARK LEVELS FOR CORPORATE BONDS:

Edited by Deepshikha Bhardwaj

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