Informist, Thursday, Sep 23, 2021
By Subhana Shaikh
MUMBAI – Yields on corporate bonds ended steady in the secondary market today as the outcome of the US Federal Reserve's bi-monthly monetary policy meeting and US Federal Reserve Chairman Jerome Powell's comments at the media briefing were largely on expected lines, dealers said.
The US Federal Reserve kept the federal funds rate target range unchanged at 0.00-0.25%, but warned that it may soon need to reduce its assets purchases every month.
At the media briefing after detailing the monetary policy, US Fed Chair Jerome Powell suggested that tapering of asset purchases might well begin as soon as in November. Meanwhile, more members of the US FOMC now expect the central bank to hike interest rates by 2022, bringing forward the timeline from 2023 as was projected earlier.
"Today, the market was flat but after the FOMC the thought process is that bull flattening might happen. Expectations are that the Reserve Bank of India might also do a little more in terms of unwinding liquidity," a fund manager with a mid-sized fund house said.
Today, some mutual funds, insurance companies and few banks were said to have been the most active in the secondary market. According to dealers, the shorter-end witnessed a few sellers while the longer-end segment saw some buyers.
Bonds issued by Indian Oil Corp, IIFL Finance, Cholamandalam Investment and Finance Co, Bharat Oman Refiners, LIC Housing Finance, HDFC Life and Insurance Co, Power Finance Corp, Indian Railways Finance Corp, and REC were traded the most across maturities.
"People are looking towards state development loans and corporate bonds more. The view is that exit from liquid assets before the RBI's policy. Additionally, the borrowing calendar might come during the month-end, so just take the money off from the table," the fund manager added.
Volumes remained subdued in the secondary market today as some market participants flocked to the primary market, where HDFC Bank raised up to 50 bln rupees through bonds maturing on Sep 27, 2028, at a coupon of 6.44%. The issue was fully subscribed.
On Friday, PNB Housing Finance Ltd has invited bids for its bonds maturing in three years. The company plans to raise up to 7 bln rupees through this issue.
Today, deals aggregating 53.44 bln rupees were reported on the National Stock Exchange, as against 59.37 bln rupees on Wednesday. The BSE recorded deals worth 31.74 bln rupees compared with 27.06 bln rupees the previous day.
UDAY BONDS
In the secondary market, Ujjwal DISCOM Assurance Yojana bonds aggregating 184.70 mln rupees were traded at a weighted average yield of 5.50-6.90%, data from the RBI's Negotiated Dealing System – Order Matching System showed.
* 51.50 mln rupees of Haryana's 2025-26 bonds were traded at 6.38-6.50%
* 27 mln rupees of Chhatisgarh's 2029 bonds were traded at 6.82%
* 22.50 mln rupees of Punjab's 2024-31 bonds were traded at 6.70-6.90%
* 10 mln rupees of Jharkhand's 2030 bonds were traded at 6.90%
* 30 mln rupees of Uttar Pradesh's 2031 bonds were traded at 6.90%
* 7 mln rupees of Tamil Nadu's 2028 bonds were traded at 6.75%
* 34.50 mln rupees of Rajasthan's 2022-26 bonds were traded at 5.50-6.47%
* 2.20 mln rupees of Telangana's 2032 bonds were traded at 6.88%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURES | TODAY | WEDNESDAY |
Three-year | 5.11-5.15% | 5.09-5.15% |
Five-year | 5.70% | 5.70% |
10-year | 6.70-6.72% | 6.68-6.70% |
End
Edited by Akul Nishant Akhoury
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