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Sovereign

• 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
Debt
Default
Interest
Principal
Security
Will
Workout
 
 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
Sovereign risk

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