Sovereign Bonds

Sovereign bonds are debt securities issued by a country's government to raise money. When investors buy these bonds, they lend money to the government, which promises to pay back the principal amount along with interest over a specified period. Governments typically issue sovereign bonds to finance public projects or manage national finances. These bonds are considered relatively safe investments, especially from stable countries, but their safety can depend on the country's economic health and ability to meet debt obligations. Essentially, sovereign bonds are government-issued IOUs that allow countries to fund their activities through borrowing from investors.