Two state-run Indian companies have withdrawn plans to raise $688 million through rupee bonds as borrowing costs climb. Sagarmala Finance Corp. pulled the country’s first blue bond—worth as much as 6 billion rupees—after receiving bids at a higher-than-expected coupon. Managing Director LVS Sudhakar Babu noted the 10-year paper was expected to price below 8% but faced unfavorable terms.

Small Industries Development Bank of India canceled a 60-billion-rupee note sale due in December 2029 after coupon bids ranged from 7.6% to 8.1%. Earlier, the same lender raised 58.89 billion rupees at 7.70% for bonds maturing in October 2029. Rising yields reflect expectations of tighter monetary policy from the Reserve Bank of India to curb oil-driven inflation.

The central bank is also draining surplus liquidity, which fell to 4.6 trillion rupees from a peak of nearly 11 trillion. State-owned Power Grid Corp. of India Ltd. accepted bids for only 20 billion rupees of its planned 50-billion-rupee issue, despite full subscription at a 7.74% coupon. Average yields on top-rated state-run bonds have climbed 14 to 20 basis points in September, marking a third consecutive monthly increase.

Globally, bond yields are at multidecade highs, with markets pricing a 70% chance of a US Federal Reserve rate hike next month.