Bonds issued by a sovereign government. (e.g. US Treasury bonds)
Bonds issued in the currency of the issuing government carry higher credit ratings and are considered to be essentially free of default risk. Both a sovereign’s ability to collect taxes and its ability to print the currency support these high credit ratings.
Some countries also issue bonds denominated in currencies different from their own. Credit ratings are often lower for a sovereign’s foreign currency bonds than for its local currency bonds. This is because the national government cannot print the developed market currency.« Back to Index