The benefits and drawbacks of tapping overseas markets for sovereign bonds

Critics fear India will pay the price Latin American nations did, in case of a global slowdown; supporters say the Centre is poised to further reduce cost of capital

The Narendra Modi government’s decision to tap the overseas debt market through sovereign bonds has stirred quite a debate. There has been a lot of criticism amid fears that India will pay the price that Latin American nations did, in case of any global slowdown and currency frustrations. Supporters, of the move, on the other hand, say that the Centre is poised to reduce the cost of capital even further and take advantage of the excess capital ‘sloshing’ around in the world’s capital markets.

Before we get into the advantages and drawbacks of overseas sovereign debt, here is what we