Nabard cancels Rs 8,000 cr bond issue on high-yield bids
Mumbai: State-owned Nabard rejected offers received for its ₹8,000-crore bond issue Tuesday after investors demanded yields in excess of 7.60% for a tenure of five
Mumbai: State-owned Nabard rejected offers received for its ₹8,000-crore bond issue Tuesday after investors demanded yields in excess of 7.60% for a tenure of five years. Nabard's bond was one of the largest proposed issuances in more than a month.The lender planned to borrow around 7.40% - 7.45%, market participants said. The withdrawal highlights palpable caution in the primary bond market, where activity picked up briefly in June but has remained muted through July and early August.Investors demanded higher returns, anticipating that yields will rise due to geo-political uncertainties.
Furthermore, markets are also watchful of the expected hawkish tone in the monetary policy scheduled on Wednesday, although the central bank is widely expected to hold rates, according to an ET poll.In the first four months of this fiscal year, corporates have issued bonds of ₹97,053 crore, almost half the issuances during the same period last year, BSE data showed. In the first four months of FY26, corporate bonds issuances amounted to ₹1.82 lakh crore. "The system has ample liquidity and credit growth remains healthy.
What has changed is investor appetite," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap, a debt advisory firm. "Fund deployment has become selective as institutions prefer to wait for greater clarity on the evolving geopolitical situation and RBI's policy outlook."Elevated government bond yields, which serve as the benchmark for pricing corporate bonds, have pushed up borrowing costs, discouraging companies from tapping the bond market.The 10-year benchmark government bond yield, considered the floor for corporates borrowing in the bond market, closed at 6.81% on Tuesday. It was at 6.60% at the start of the year.
The one-year marginal cost of lending rate, or MCLR, at State Bank of India stands at 8.70%."Yes, there is a slowdown in corporate bonds, and this is going to continue over the year. Yields have moved higher as markets increasingly price in risks arising from the ongoing geopolitical tensions," said Soumyajit Niyogi, director, India Ratings Research. "In this environment, fixed-rate corporate bond borrowing costs have moved higher and turned comparable to bank funding rates."
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