Country’s First Overseas Sovereign Bond issued by September 08/07/2019 – Posted in: Daily News

COUNTRY’S FIRST OVERSEAS SOVEREIGN BOND ISSUED BY SEPTEMBER

 

For: Preliminary & Mains

Topics covered: About the bond, Significance

 

News Flash

The Reserve Bank of India with the government of India will finalise plans for the country’s first overseas sovereign bond.

The bond may be issued by September when the Centre’s second quarter borrowing programme is finalised.

India would command rates comparable with major countries despite its credit rating being lower than several emerging markets.

 

Overseas borrowing may help RBI cut rates

  • The issue of sovereign bonds opens up a funding route for the government at a time when it is faced with a funds crunch and has to stick to a fiscal consolidation road map.
  • There are a number of countries which have issued sovereign bonds like China, the Philippines, and Malaysia.
  • India is confident of getting a good deal for Indian sovereign bonds.
  • There would be no impact of the low sovereign credit rating.
  • India provides an opportunity for investors to fetch better returns.
  • There is so much demand for Indian paper, even our sub-sovereigns issues such as Exim bank, PFC, IRFC get reasonable rates, comparable to other sovereigns.
  • The sovereign bond issue as part of the government’s overall borrowing programme will also ease pressure on the domestic markets.
  • It could also help in RBI’s efforts to bring down interest rates.

 

Source: ET

 

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