The Small Industries Development Bank of India recently cancelled its planned bond issuance after receiving investor bids at yields higher than it was willing to accept, as per news reports.
Meanwhile, Bank of Baroda successfully raised funds through a green infrastructure bond issue, reflecting contrasting investor appetite across different tenors in the domestic bond market.
Bank of Baroda’s ₹10,000 crore green infrastructure bond issue witnessed robust demand from institutional investors. The 7-year bonds were priced at around 7.1%, and the bank exercised the greenshoe option to retain the full issue size, reflecting strong appetite from long-term institutional investors.
The success of the transaction indicates that long-duration AAA-rated bank bonds continue to attract interest from pension funds, insurance companies, and provident funds that prefer stable, high-quality assets aligned with their regulatory investment requirements and long-term liabilities.
In contrast, the Small Industries Development Bank of India called off its planned ₹8,000 crore bond issuance after receiving bids at yields above the level it was prepared to accept. The institution received bids worth ₹5,079 crore for its 3-year bonds, with most yields ranging between 7.28% and 7.44%.
Market participants attribute the cautious investor sentiment to volatility in global financial markets following the latest escalation of geopolitical tensions in West Asia. This uncertainty has influenced risk perception and pricing expectations in the bond market.
At the same time, institutional investors continue to have capital available for deployment due to relatively limited issuance from banks this year. Following the success of the Bank of Baroda transaction, other large banks with board approvals and near-term funding requirements may consider entering the bond market in the coming weeks.
Read More: Cabinet Approves ₹5,000 Crore Equity Support for SIDBI to Boost MSME Financing!
The contrasting outcomes highlight shifting investor preferences in India’s bond market. While short-term issuers face pricing pressure amid global uncertainties, long-tenor AAA-rated bank bonds continue to attract institutional demand. The success of Bank of Baroda’s green bond issue may encourage other major banks to tap the debt market in the coming weeks.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Mar 5, 2026, 1:55 PM IST
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