Sovereign Bond
Also called: gilts, bunds, sovereign debt, sovereign debt market
A sovereign bond is debt issued by a national government, and it anchors the pricing of everything else in that currency. The critical distinction is the currency of issue: a government borrowing in its own currency can always print to repay, so its risk is inflation and devaluation rather than default, while one borrowing in a foreign currency genuinely can and does default. That asymmetry explains most emerging-market debt crises.
Want more than a definition? Learn it in Macro & Markets →