PFC and Nabard Cancel ₹10,000 Crore Bond Issues Due to High Auction Yields
State-owned Power Finance Company (PFC) and the National Bank for Agriculture and Rural Development (Nabard) have decided to cancel their planned bond issuances worth ₹10,000 crore. The cancellation stems from yields in the auction exceeding their expectations, prompting issuers to rethink their strategy.
– Awaiting Monetary Policy Committee (MPC) Decision: Bond market participants anticipate both PFC and Nabard to re-enter the market following the MPC’s decision on December 5, hoping for lower yields.
– Higher Yields: Recent data indicated that expected yields had risen. According to Venkatakrishnan Srinivasan from Rockfort Fincap, while issuers expected yields around 6.65%, market bids reached 6.75%, which was deemed unsatisfactory.
– Rate Cut Speculation: Following comments from RBI Governor Sanjay Malhotra, there is growing speculation of a potential repo rate cut. This expectation hinges on the MPC’s upcoming discussions, as the RBI has not altered rates since August, despite reducing them by 100 basis points earlier this year.
Additionally, PFC did successfully raise ₹3,000 crore through a 10-year bond issue prior to the cancellation, while Nabard scrapped its planned ₹7,000 crore issuance altogether. With a three-year funding need, both companies are now inclined to await more favorable market conditions post-MPC decision.
The bond market’s landscape remains dynamic, and stakeholders are gearing up for further developments after December 5.