A bond is a debt instrument, where the investor lends money to the issuer at a certain rate of interest for a said period. The issuer can be Government, Corporates, Government Organizations, etc. Bonds assist in raising capital. Let’s have a detailed look at State Government Bonds.
State Government Bonds are issued by the State Governments to raise capital, mostly to meet infrastructure development expenditure. Hence, they are also called State Development Loans (SDL). The Reserve Bank of India (RBI) acts as a facilitator for the issuance of these bonds. These bonds are issued usually through bidding. Investors for these bonds can be corporates, banks, trusts, HUF, individuals, etc. Institutional investors participate in the process of bidding. Retail investors avail these bonds through a bidding process that is non-competitive. They can purchase these bonds through exchanges or through institutions like Rurash Financials Private Limited, which are well versed with the industry and provide customized solutions. Rurash caters to segments across the financial spectrum including the Ultra HNI and NRI categories.
Features of State Government Bonds
The issuer is the State Government.
As the issuing authority is the State Government, it carries a lower risk.
Long Term Investment
They are issued for a longer term as they are issued to meet development expenditure. They are mostly for a period of 5 to 50 years.
The rating differs for different State bonds, depending on the strength of their credit. On the whole, State Government Bonds have a relatively higher rating as they are issued by the Government. The rating varies from AAA to AA and Rurash Financials offers such high rated bonds.
Key Benefits of State Government Bonds
The issuer being the State Government, they are relatively low risk and are attractive to investors who want a stable investment.
The return in most cases is fixed at the time of issue and this, in turn, leads to less uncertainty.
Investing in a State Government Bond can balance a bond portfolio by mitigating the risk emanating from other bonds like Corporate Bonds. Rurash Financials are seasoned professionals who can assist you in making an informed decision and providing tailor-made solutions.
The issuance by the State Government and the high rating ensures stability.