Sales of corporate bonds fell nearly 13% on the month in December

Among issuers, ICICI Bank, Canara Bank, State Bank of India, LIC Housing Finance, Axis Bank and Housing Development Finance Corporation remained the top issuers, raising more than 40% of the total amount raised in December.

By Manish M. Suvarna

Fundraising via corporate bonds through mandates and ratings fell nearly 13% on the month in December, with most issuers sitting on the sidelines due to higher yields on these papers. . According to data compiled by the Prime database, businesses and banks raised Rs 48,852 crore in December, up from Rs 56,096 crore in November.

Among issuers, ICICI Bank, Canara Bank, State Bank of India, LIC Housing Finance, Axis Bank and Housing Development Finance Corporation remained the top issuers, raising more than 40% of the total amount raised in December.

“The upward trend in yields in line with fear of inflation and the likelihood of rising rates has kept investors at bay and their reluctant behavior has resulted in a lower than normal issuance trend,” Ajay Manglunia said. , Managing Director and Head of Institutional Fixed Income at JM Financial.

Corporate bond yields across maturities rose nearly 10 to 20 basis points in December after yields on government securities, particularly benchmark bonds, rose over fears of a rise in the price. inflation and concerns about the rapid spread of the Omicron variant of Covid-19. The benchmark 10-year bond yield 6.10% -2031 increased by almost 10 to 12 basis points in December, mainly after monetary policy.

“CPI inflation has trended upward, leading to higher inflation expectations. G-Sec’s trade is on the expected inflationary path and as a result volatility is on the rise, ”said Sandeep Bagla, Managing Director of Trust Mutual Fund.

Additionally, the Reserve Bank of India (RBI) and other central banks around the world are seeking to normalize monetary policy, and as a result, bond yields have become volatile in anticipation of rate hikes.

Market participants have said that a rise in corporate bond yields is likely to continue over fears of a central bank rate hike and an acceleration of the RBI’s withdrawal of liquidity from the banking system.

“This trend could continue for a while as the fear of a rate hike persists and ahead of the budget which cuts next year’s budget deficit and borrowing in the market must keep investors very cautious,” added Manglunia.

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