I was reading about bonds which are issued by States in India. These are called State Government Bonds (SGBs) or State Development Loans (SDLs).
These are almost equivalent to a sovereign bond with backing by the State Government but ideally are not. The risk associated result in a higher yeild they offer.
Supposing that the government in power issues these and the government changes due to elections. In case the state goes bankrupt; who will then be responsible for paying back the bond holders?

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