The government is mulling the option of issuing sovereign bonds overseas in the financial year 2018-19, within the revised market borrowing, Cogencis reported.

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The revised market borrowing, where the government will borrow Rs 2.88 lakh crore between the April-September period compared to its Rs 3.72 lakh crore borrowing same time last year.

The government may initially raise $4 billion via sovereign bonds, however, no decision has been taken as of yet, sources told the news agency on Wednesday.

Depending on the response, the quantum of funds raised through dollar-denominated bonds is likely to be increased. The government is likely to bear the exchange rate risk on the offshore bonds, which will make it akin to masala bonds, sources told Cogenics.

"Over the last 25 years, the rupee has been fairly stable against the US dollar. On a CAGR basis, it has depreciated just 2% in the last 10 years, and it has hardly moved in the last 5 years. Any mild depreciation will be more than compensated by the lower cost of borrowing," the source told the news agency.

If the bonds are issued, this will be the first time for the Indian government to take this step.

Read the full story on Cogenics

First Published:Apr 11, 2018 1:35 PM IST