Overseas sovereign bond issue

Why is it in the news?
  • The Prime Minister's Office (PMO) wants the finance ministry to reassess the idea of issuing foreign currency overseas sovereign bonds.
More in the news
    • Finance Minister had in her budget speech said that India would look to issue overseas foreign currency sovereign bonds.
    • The idea, however, has been criticised by former heads of the Reserve Bank of India and economists as it could create long-term economic risks by exposing the government's liabilities to currency fluctuations.
    • Sovereign bonds
      (1) A sovereign bond is a specific debt instrument issued by the government.
      (2) They can be denominated in both foreign and domestic currency.
      (3) Just like other bonds, these also promise to pay the buyer a certain amount of interest for a stipulated number of years and repay the face value on maturity.
      (4) They also have a rating associated with them which essentially speaks of their credit worthiness. 
    Source
    Indian Express




    Posted by Jawwad Kazi on 26th Jul 2019
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