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Sovereign Debt

Sovereign Debt Definition

Sovereign Debt is synonym for government debt. It refers to a debt instrument guaranteed by a government. Its usual form is a bond issued by a national government, a so-called sovereign bond.


Additional meaning of Sovereign Debt:

The total amount owed to the holders of the sovereign bonds is called sovereign debt. The doctrine of sovereign immunity ensures that the repayment of sovereign debt cannot be forced by the creditors, therefore it can only be subject to rescheduling, interest rate reduction, or repudiation. The creditors can only be protected by the threat of the loss of credibility and lowering of the sovereign debt rating of the issuing country.


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