The government seems to be having second thoughts about coming out with sovereign bonds worth USD 10 billion over concerns that the cost could shoot up if the rupee depreciates against the dollar. Finance Minister Nirmala Sitharaman had announced in the Budget that the government would go in for sovereign bonds or debt issued abroad. These bonds are denominated in dollars and the value of debt along with interest has to be paid back in dollars.
The rationale for raising money abroad is that interest rates are lower in global money markets such as London and New York than in India. Finance ministry top brass felt it would be possible to borrow at rates as low as 3.25-3.5 per cent and they were planning to issue a tranche of sovereign bonds payable after 10 years as early as October this year.