Nabard Bond Fails: Investors Demand Higher Yields

Nabard recently withdrew its ₹8,000-crore bond offering. Investors had demanded yields exceeding 7.60% for the five-year tenure, a level higher than Nabard's planned borrowing of 7.40%-7.45%. This action underscores a palpable caution within the primary bond market.

Investor apprehension is fueled by geopolitical uncertainties and an anticipation of a hawkish monetary policy stance expected on Wednesday. This cautious sentiment has led to a significant downturn in corporate bond issuances. In the first four months of the current fiscal year, corporate bonds amounted to ₹97,053 crore, less than half of the issuances during the same period last year.

Elevated government bond yields, currently at 6.81% for the 10-year benchmark, are pushing borrowing costs higher. This trend makes fixed-rate corporate borrowing increasingly comparable to bank funding rates, further discouraging companies from tapping the bond market. Institutions are now more selective, preferring to wait for clearer market signals and policy outlooks.