Nabard pulls out bond issuance on weak demand

The National Bank for Agriculture and Rural Development (Nabard) withdrew a planned three-year bond sale on Friday on weak investor demand that meant higher borrowing costs, market participants told ET. The lender had sought to raise ₹7,000 crore through the issuance, which included a ₹5,000 crore greenshoe option. However, bids worth only ₹3,030 crore were received. Dealers said Nabard would have had to pay around 7.79% even to raise base ₹2,000 crore amount, while accepting full set of bids received would have pushed the borrowing cost to 8.04%.

“Most market participants know that Nabard would not accept a rate as high as 8%, so the bidding automatically stopped at about ₹3000 crore,” said a corporate bond expert at a primary dealership.

Nabard, in April, had raised ₹4,250 crore at 7.49% for three years, and ₹7,265 crore at 7.44% for three years. Over this week, Nabfid raised ₹4,000 crore at 7.74% for 10 years, Mahindra and Mahindra Finance raised ₹650 crore at 7.90% for two years, Bajaj Finance raised ₹1,822 crore for five years and Bajaj Housing Finance raised ₹955 crore for 7.90%.