Sovereign Bond

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Sovereign Default

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

    A sovereign wealth fund of the Government of the Hong Kong Special ...
  3. Country Risk

    A collection of risks associated with investing in a foreign ...
  4. Hard Currency

    A currency, usually from a highly industrialized country, that ...
  5. Government Security

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

    The event in which companies or individuals will be unable to ...
Related Articles
  1. Insurance

    Investing Beyond Your Borders

  2. Credit & Loans

    How Countries Deal With Debt

  3. Bonds & Fixed Income

    Basics Of Federal Bond Issues

  4. Retirement

    Bond Basics Tutorial

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center