Investing term

What is Sovereign bond?

A bond issued by a government — you are lending money to a country in exchange for interest.

A sovereign bond is debt issued by a national government — lending money to a country in exchange for interest and the return of principal. Bonds from stable governments in their own currency are considered among the safest assets, since a government can usually tax or print to repay. Sovereign bonds from weaker economies carry more default and currency risk and pay more to compensate.

For example

Buying a US Treasury or UK Gilt is lending to that government — about as safe as bonds get, which is why they anchor conservative portfolios.

Sovereign bond is taught hands-on in Stage 19 — Beyond Stocks.

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Related terms

ASMLDutch semiconductor-equipment company that makes the EUV lithography machines every advanced chip is manufactured on — a global monopoly with no US peer.Bond ladderA portfolio of bonds with staggered maturities — one matures every year (or every few years) so cash continuously becomes available.CryptocurrencyDigital assets recorded on a blockchain — Bitcoin, Ethereum, etc. Highly volatile and not backed by cash flows or governments.Currency hedgingAn overlay used by some international ETFs to remove the effect of currency moves, so you get the foreign stock return in your home currency.
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