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HomeNewsBusinessRBI Bulletin: India’s sovereign rating upgrade by S&P bodes well for capital inflows and sovereign yields

RBI Bulletin: India’s sovereign rating upgrade by S&P bodes well for capital inflows and sovereign yields

On August 14, S&P Global Ratings has upgraded India’s long-term unsolicited sovereign credit rating to ‘BBB’ from ‘BBB-’, while also raising the short-term rating to ‘A-2’ from ‘A-3’.

August 28, 2025 / 22:55 IST
Reserve Bank of India

The ratings upgrade by the S&P Global Ratings bodes well for the capital flows and sovereign bond yield, according to the Reserve Bank of India’s (RBI) August Bulletin.

The bulletin added that the S&P’s sovereign rating upgrade for India – underpinned by buoyant economic growth, enhanced monetary policy credibility and government’s commitment to fiscal consolidation – could potentially lead to a reduction in borrowing costs, greater investor confidence and higher foreign capital inflows, going forward.

On August 14, S&P Global Ratings upgraded India’s long-term unsolicited sovereign credit rating to ‘BBB’ from ‘BBB-’, while also raising the short-term rating to ‘A-2’ from ‘A-3’.

However, 10-year G-sec yields firmed up during mid-July to early August, amidst uncertainties over India-US trade negotiations and receding expectations of further monetary policy easing, bulletin said.

Following the announcement of S&P’s upgrade of India’s sovereign rating on August 14, 2025 the 10-year G-sec yields eased briefly. Thereafter, yields hardened during the third week of August.

The average term premium (the difference between the 10-year G-sec yield and the 91-day treasury bill yield) increased by 3 bps during July 16 to August 21, 2025 as compared to June 16 to July 15, 2025, Bulletin added.

Manish M. Suvarna
Manish M. Suvarna is Senior Correspondent at Moneycontrol. He writes on the Indian money markets, RBI, Banks and NBFCs. He tweets at @manishsuvarna15. Contact: Manish.Suvarna@nw18.com
first published: Aug 28, 2025 10:55 pm

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