Indian Oil Corp, Power Finance Corp Pull Bond Sales As RBI Moves Spark Swings

Two state-run Indian companies scrapped plans to issue rupee-denominated bonds amid yield volatility triggered by the Reserve Bank of India’s surprise policy moves.

Refiner Indian Oil Corp. on Wednesday withdrew plans to sell as much as 30 billion rupees ($351 million) of five-year notes despite strong demand, while Power Finance Corp. on Monday canceled a 20-billion rupee sale of bonds due in July 2035.

The average yield on top-rated three- and five-year corporate debt rose eight basis points and nine basis points, respectively, this week after dropping 4-5 basis points after the central bank’s liquidity boost on Friday.

“Pulling of bond sales signals that initial market euphoria is giving way for a more cautious reassessment,” said Venkatakrishnan Srinivasan, managing partner at financial advisory firm Rockfort Fincap. “Such issuers may wait for yields to settle down before raising money.”

The RBI on Friday delivered a bigger-than-expected rate cut and injected further liquidity, spurring a rally in shorter-tenor bond. However, a simultaneous shift to a neutral stance set a higher bar for future easing, tempering enthusiasm for longer-dated debt.