Sovereign Bond Yield
Categories: Bonds
Sovereign bonds are government bonds, like U.S. Treasury securities. People love ‘em, because they’re at least notionally practically risk-free.
International credit agencies, like Standard & Poor’s, rate how safe bonds are based on the country’s growth, history of default, per capita income, inflation, and other economic indicators.
But...low risk usually means low bond yields. A sovereign bond yield is the interest rate that a sovereign bondholder receives on the bond. From the government’s perspective, it’s the interest rate at which they’re borrowing money. When a government needs more revenue, they might sell more sovereign bonds. How to raise the demand for sovereign bonds? Raise the sovereign bond yield, i.e. sweeten the deal.
Even if you’re not interested in the risk-free sovereign bond game, you might still find the sovereign bond yield useful info. Investors often use the sovereign bond yield as a relative baseline for other bonds, like corporate bonds...the other type of bondage.
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Finance allah shmoop what is a yankee bond We're safe
We're sound we're saying at least that's how we look
financially when you know the u s has compared with
most of the rest of the world that's why a
bunch of countries issue their own bonds denominated in u
s dollars you know countries like panama el salvador micronesia
and macron asia Well ours is ah hard currency and
that we don't or at least haven't historically created massive
ten percent a month inflation to deflate the value of
our own currency and well that would make it super
easy for our government to pay off its ludicrously high
death but we don't do that We respect the people
who loaned money to us including our own citizens So
we have a hard currency It just kind of stays
where it is Yes there's inflation Yes we raise the
rates a little bit here and there defended but generally
just kind of does its thing So we fight hard
to keep that trust that the rest of the world
often values more than well trust in their own governments
or at least their own government's ability to manage their
currency when they issue say argentinean bonds payable in u
s dollars Well then that's a yankee bond And we 00:01:14.819 --> [endTime] are the banker And well they are the yankee