Government Bond

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DEFINITION of 'Government Bond'

A debt security issued by a government to support government spending, most often issued in the country's domestic currency. Government debt is money owed by any level of government and is backed by the full faith of the government. Federal government bonds in the United States include: the savings bond, Treasury bond, Treasury inflation-protected securities (TIPS), and others. Before investing in government bonds, investors need to assess several risks associated with the country such as: country risk, political risk, inflation risk, and interest rate risk.

BREAKING DOWN 'Government Bond'

Lending to a national government in the country's own sovereign currency, government bonds, are free of credit risk, because the government can raise taxes or simply print more money to redeem the bond at maturity. But this does not mean risk-free.

 

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