Quasi-Sovereign Bond

Quasi-sovereign bonds are debt instruments issued by entities that are not the central government but carry an implicit or explicit government guarantee or support—such as government-owned development banks, public sector financial institutions, or multilateral agencies. In India, bonds issued by entities like NABARD, SIDBI, NHB, EXIM Bank, and state government-owned infrastructure companies fall into this category. These bonds typically carry very high credit ratings (often AAA) due to their government-linked status and offer yields slightly higher than pure sovereign G-Secs to compensate for the marginal additional risk. They are widely held by banks, insurance companies, and provident funds in India.