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India Corporate Bonds: 3-yr yields down on MF demand; mkt eyes Oct CPI

India Corporate Bonds: 3-yr yields down on MF demand; mkt eyes Oct CPI


MUMBAI: Yields on corporate bonds maturing in up to three years ended lower in the secondary market today due to firm demand from mutual funds, dealers said.

Yields on bonds of other maturities remained largely steady as investors avoided placing large bets ahead of the release of the Consumer Price Index-based inflation print for October today.

According to the median of estimates of 22 economists polled by Cogencis, the CPI inflation print for October is expected to have inched up to 7.4% from 7.34% the previous month, as a continued rise in food prices is likely to have nullified the statistical effect of a favourable base.

In the secondary market today, mutual funds bought papers issued by National Bank for Agriculture and Rural Development, Housing Development Finance Corp, REC, Food Corp of India, Power Finance Corp, HDB Financial Services, Vedanta and Reliance Jio Infocomm, among others, maturing in up to 2023, dealers said.

“We are buying at the shorter end because we are seeing inflows in the shorter-tenure schemes. Also, general insurance companies are holding these bonds with a less than 3-4 year of residual maturity want to sell them,” a fund manager with a mid-sized fund house said.

Today, a few general insurance companies, life insurers, banks and brokerages were also active in the market.

They mainly traded bonds issued by Indian Railway Finance Corp, NTPC, State Bank of India, Indian Renewable Energy Development Agency, Bank of Baroda, THDC India, and Tata Capital Financial Services.

In the primary market, Bank of Baroda raised 8.33 bln rupees through Basel III-compliant tier-I bond issue at a coupon of 8.50% today. The lender had planned to raise up to 15 bln rupees through this issue.

The National Stock Exchange reported deals aggregating 31.46 bln rupees, as against 25.44 bln rupees on Wednesday. The BSE saw deals totalling 10.15 bln rupees, as against 16.57 bln rupees the previous day.


In the secondary market, Ujjwal DISCOM Assurance Yojana bonds aggregating 699.8 mln rupees were traded at a weighted average yield of 3.97-6.78%, data from the Reserve Bank of India’s Negotiated Dealing System-Order Matching System showed.

* 500 mln rupees of Maharashtra’s 2022 bonds were traded at 3.97%

* 104 mln rupees of Haryana’s 2024-2026 bonds were traded at 6.11-6.45%

* 91.8 mln rupees of Uttar Pradesh’s 2026-2031 bonds were traded at 6.69-6.78%

* 4 mln rupees of Rajasthan’s 2025 bonds were traded at 6.69%


Three-year 4.70-4.75% 4.77-4.80%
Five-year 5.48-5.50% 5.48-5.52%
10-year 6.43-6.45% 6.43-6.45%


Source: cogencis
Anand Gupta Editor - EQ Int'l Media Network