A sovereign bond is a Bond (finance) issuer by a national government The term usually refers to bonds issued in foreign currency while bonds issued by national governments in the countrys own currency are referred to as government bond .The total amount owed to the holders of the sovereign bonds is called sovereign debt Nation with very high or unpredictable inflation or with unstable exchange rate often find it uneconomic to issue bonds in their own currencies and so are forced to issue bonds denominated in more stable foreign currencies. This raises the issue of sovereign default if the nation cannot afford to repurchase the necessary foreign currency at bond repayment time. Because of the risk of default, investors require the bonds to be issued with a higher yield (finance) This makes the debt more expensive to service, increasing risk of default. In the event of default, unlike a corporation or even a municipal subdivision, a nation cannot file for bankruptcy But on the rare occasions that a default occurs, just as in defaults on corporate bond , recent practice has been that the defaulting borrower presents an exchange offer to its bond holders in an effort to restructure the sovereign debt, as has been the case in US dollar denominated bonds issued by Peru (1996) and Argentina (2001). However, getting the bond holders to accept an exchange offer has become very difficult, something caused by the holdout problem

See also

*Government debt *Emerging market debt *Brady Bonds *Consols *GKO-OFZ *Currency crisis *2010 European sovereign debt crisis *Asset liability mismatch Category:Bonds de:Staatsanleihe fr:Dette souveraine id:Obligasi internasional ja:ソブリン債 pt:Dívida soberana