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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.
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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.
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Investing in bonds - What are they, and do they belong in your portfolio?
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For many emerging economies, issuing sovereign debt is the only way to raise funds, but things can go sour quickly.
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Treasuries are considered the safest investments, but they should still be analyzed when issued.
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