• Refers to a debt security issued by a government other than the United States. It is often believed that the issuing government via its treasury will fully back the payment of interest and principal in a timely manner. Sometimes, that backing is insufficient and a default occurs. At times of default, there are distinctions. Sometimes, there is a political upheaval and the new regime repudiates the former's obligations. At other times, there can be a lack of specified reserves to honor the obligations but a workout or restructuring of the payment schedule is agreed, bilaterally.
| ||Embedded terms in definition|
| ||Debt security|
| ||Referenced Terms|
| ||Act of state doctrine: This doctrine says that a nation is Sovereign within its own borders and its domestic actions may not be questioned in the courts of another nation.|
| ||Balance of payments: A statistical compilation formulated by a Sovereign nation of all economic transactions between residents of that nation and residents of all other nations during a stipulated period of time, usually a calendar year.|
| ||Bond fund: A fund that holds municipal, corporate, and/or government bonds.Are mutual funds that invest in credit instruments. There can be distinctions, such as, treasury, international, Sovereign, mortgage backed, investment grade corporate and high yield or junk bonds.A mutual fund whose investment objective is to provide stable income with a minimal capital risk. It invests in income-producing instruments, which may include corporate, government or municipal bonds. See also: Mutual Fund.|
| ||Brady bonds: These are issued in conjunction with defaulted Latin American Sovereign debt. Named after a Treasury secretary, Nicholas Brady. Brady bonds are debt-for-debt swaps.Bonds issued by emerging countries under a debt reduction plan.|
| ||Country risk: General level of political and economic uncertainty in a country affecting the value of loans or investments in that country.See Sovereign risk.|
| ||Related Terms|
| ||Doctrine of sovereign immunity|
Tips for Trying to Fix a Clogged or "Frozen" Home Equity Line: For years, homeowners have turned to home equity lines of credit (HELOCs) as a way to borrow against their home's value to pay for college tuition, home improvements, medical bills and other major expenses. (A home's equity is the market value minus what is owed on the mortgage. If you owe $100,000 on your mortgage but your home is worth $250,000, your equity is $150,000.) More...
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