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The Indian government has 10-year Rupee bonds outstanding, with a yield to maturity of 7.87%. The local currency sovereign rating is BBB-. The typical default

The Indian government has 10-year Rupee bonds outstanding, with a yield to maturity of 7.87%. The local currency sovereign rating is BBB-. The typical default spread (over a risk-free rate) for BBB- rated country bonds was 220 bps. The risk-free rate in Indian Rupees is:

The yield to maturity on the 10-year bond (7.87%)

The yield to maturity on the 10-year bond + Default spread (10.07%)

The yield to maturity on the 10-year bond Default spread (5.67%)

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