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Sovereign bonds, otherwise known as government bonds, are bonds issued by national governments around the world with the main purpose of financing the operational needs of the government, and a tool to control the nation’s money supply. Similar to all other bonds, sovereign bonds pay out periodic coupons and a lump-sum at maturity. Most stable governments with a favourable financial position can offer bonds at a lower rate due to its low level of risks, such as the US government’s treasuries, which are deemed to be risk-free. In contrast, countries such as Brazil, has to offer at a premium to reflect its higher risk.