 "States' issuance of discom bonds has also worried the FPI, and they see it as a potential stress")
When interest rates are on the higher side, investors try to lock into the best available rates (see table: Best FD rates across tenures). If they invest the bulk of their money in bonds that mature at around the same time, they could create a high degree of liquidity and reinvestment risk in their portfolios.
Liquidity refers to how quickly an investment can be converted into cash. A person who has invested in bank fixed deposit (FDs) can raise money within a couple of hours. Someone who has invested in illiquid bonds may find it difficult to sell them at
