Sovereign Bond


DEFINITION of 'Sovereign Bond'

A debt security issued by a national government within a given country and denominated in a foreign currency. The foreign currency used will most likely be a hard currency, and may represent significantly more risk to the bondholder.

BREAKING DOWN 'Sovereign Bond'

The government of a country with an unstable economy will tend to denominate its bonds in the currency of a country with a stable economy. Because of default risk, sovereign bonds tend to be offered at a discount. Brady bonds, which are issued by governments in developing countries, are a popular example of sovereign debt securities.

  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Sovereign Default

    A failure on the repayment of a county's government debts. Countries ...
  3. Hong Kong Monetary Authority Investment ...

    A sovereign wealth fund of the Government of the Hong Kong Special ...
  4. Hard Currency

    A currency, usually from a highly industrialized country, that ...
  5. Country Risk

    A collection of risks associated with investing in a foreign ...
  6. Government Security

    A bond (or debt obligation) issued by a government authority, ...
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