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.
Nabard rejected its ₹8,000-crore bond offering as investors sought higher yields. This withdrawal highlights investor caution in the primary bond market. Geopolitical uncertainties and monetary policy outlook are influencing investor demands. Corporate bond issuances have significantly decreased compared to the previous year. Institutions are selectively deploying funds while awaiting market clarity.
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.
State Bank of India stands at 8.70%.
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