National Bank for Agriculture and Rural Development (Nabard) withdrew its bond offering on Wednesday as the bids for the coupon were higher than what it was willing to pay, market participants said.
The state-owned company had invited bids for bonds maturing in three years. The issue had a base size of Rs 2,000 crore and a greenshoe option of Rs 3,000 crore.
The issuer received bids in the range of 7.85-7.87 per cent, according to market participants.
“The bidding was at a slightly higher level than what Nabard was looking for,” said Venkatakrishnan Srinivasan, bond market veteran and founder of boutique financial advisory firm Rockfort Fincap.
Market participants said that Nabard is a frequent issuer and there was additional supply from Indian Railway Finance Corporation (IRFC) and Small Industries Development Bank of India (Sidbi), which saw investors demand a higher coupon from Nabard. However, the state-owned company was not comfortable with the bidding price. Consequently, they opted to withdraw the issue for the time being, with the possibility of revisiting the market at a later date if the market improves.
“When there is high supply, people tend to ask higher rates for the issue where there is more exposure. IRFC and Sidbi, which are less frequent in the market, had rates lower than Nabard,” said Ajay Manglunia, managing director and head (institutional fixed income), JM Financial. “They (Nabard) decided to postpone the issuance, and they might come back when the market improves,” he added.
IRFC raised Rs 2,404 crore at 7.68 per cent through bonds maturing in three years, whereas, Sidbi raised Rs 4,887 crore at 7.83 per cent through bonds maturing in five years.
Last year, Nabard had withdrawn Rs 5,000 crore worth of issuance on May 25 due to similar reasons.