I was browsing through @GoldenPi and came across a collection of State Government Guaranteed Bonds giving above 10% return. All these were from the same organization - UP Power Corporation Limited. I noticed that most of these bonds have been listed on the exchanges for over 2-3 years. Currently, some of these bonds are offering returns above their original coupon rate. Is there some kind of fear that these bonds will default? I came across an article that specifically mentioned UPPCL and cited losses incurred by its PF investments as a reason for worry.
But given that there is an implied sovereign guarantee behind these bonds, why is there so much worry? Is there a chance that state government owned firms in India will face bond defaults?