Nabard Cancels ₹8,000 Crore Bond Issue As Investors Demand Yields Above 7.60%

The state-run National Bank for Agriculture and Rural Development (Nabard) has cancelled its planned ₹8,000 crore bond sale after rejecting all the bids it received. Investors asked for higher yields than the lender was willing to accept.

The move points to growing caution in India's corporate bond market. Borrowing costs have been rising as global uncertainty and changing interest rate expectations keep investors on edge.

The planned issue was one of the biggest bond sales lined up in more than a month. Traders said Nabard wanted to raise money at a yield of about 7.40% to 7.45%. Investors, however, sought yields above 7.60%. As a result, the lender decided not to go ahead with the issue.

Higher Yield Demands Show Investor Caution

Investors have turned more careful in recent weeks. Global tensions and shifting interest rate expectations have made them demand better returns before putting fresh money into bonds.

The Reserve Bank of India's policy decision also remains in focus. Most market participants expect the central bank to keep interest rates unchanged. Even so, investors are waiting for comments on inflation, liquidity and the policy outlook.

That has made it tougher for companies and financial institutions to borrow at the rates they want.

Corporate Bond Issuances Lose Pace

The slowdown has started to show in the primary market as well.

Companies raised ₹97,053 crore through corporate bonds in the first four months of the current financial year. During the same period a year earlier, they had raised ₹1.82 lakh crore. The gap highlights the weaker pace of fundraising.

Banks continue to have enough liquidity, and credit demand has stayed steady. Even so, issuers are finding it difficult to attract investors without offering higher yields.

Rising G-Sec Yields Add Pressure

Government bond yields have also pushed up borrowing costs. Corporate bond pricing usually takes its cue from government securities. So, when G-Sec yields move higher, companies could also have to pay more to raise debt.

The benchmark 10-year government bond yield ended Tuesday at 6.81%. At the start of the year, it was around 6.60%.

As benchmark yields rise, issuing fixed-rate corporate bonds usually becomes costlier. In some cases, the cost may come close to bank borrowing.

With investors still asking for higher returns and market uncertainty continuing, some companies may hold back bond sales or reduce the size of their planned issuances until borrowing conditions become more favourable.

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