Finshots Daily Why S&P finally raised India’s credit rating
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Aug 22, 2025 Discover the long-awaited upgrade of India's sovereign credit rating by S&P Global, the first in 18 years. Delve into how this shift enhances investor confidence and impacts foreign investments. Explore the significant role of credit ratings on borrowing costs and market dynamics, alongside the immediate effects on bond yields. Understand the key factors behind the upgrade, including India's fiscal health and challenges that lie ahead to maintain this newfound status.
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What A Sovereign Rating Means
- A sovereign credit rating is a government's report card that signals its ability to repay loans and issue bonds safely.
- India's move from BBB- to BBB tells investors the country is investment-grade but still vulnerable if conditions worsen.
Upgrade Attracts Global Bond Money
- An upgrade boosts investor confidence and can unlock inclusion in major global bond indices.
- Inclusion often brings billions of dollars, more liquidity and lower government borrowing costs.
Immediate Market Reaction
- Markets reacted immediately: India's 10-year bond yield fell from 6.51% to 6.4% after the upgrade.
- Yields later moved for other reasons, highlighting that ratings are only one market driver.