Sovereign Debt
Bonds issued by a national government.
What is Sovereign Debt?
Debt of a national government. Bonds issued in a government's own currency carry little default risk in the nominal sense, since it can print money. Debt issued in a foreign currency, typical of emerging markets, carries real default risk. Foreign sovereign bonds add currency risk and geopolitical risk for a US investor.
Sovereign Debt: a worked example
An emerging-market government borrowing in US dollars can default if its own currency collapses and its dollar revenues dry up.
More terms in Economics & Financial Reporting
Business Cycle
The recurring pattern of expansion, peak, contraction, and trough.
Leading, Coincident & Lagging Indicators
Data series that move before, with, or after the business cycle.
Deflation vs. Disinflation
Falling prices versus a slowing rate of price increases.
Currency Valuation & Exchange Rates
What one currency buys of another, and who wins when it moves.
Trade Deficit
A country imports more goods and services than it exports.
Income Statement
Revenue, expenses, and profit over a period of time.
Balance Sheet
Assets, liabilities, and equity at a single point in time.
Statement of Cash Flows
Where cash came from and where it went: operating, investing, financing.