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Securities

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Bonds by coupon
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A government bond is a bond issued by a national government denominated in the country's own currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds.

Contents

  • 1 Risk
  • 2 Issuance
  • 3 See also
  • 4 List of government bonds from the main issuers
    • 4.1 Asia
      • 4.1.1  Japan (AA-/A2)
    • 4.2 Europe
      • 4.2.1 Eurozone
        • 4.2.1.1  France (AAA/Aaa)
        • 4.2.1.2  Germany (AAA/Aaa)
        • 4.2.1.3  Italy (AA- "with negative outlook"/Aa2)
      • 4.2.2  United Kingdom (AAA/Aaa)
    • 4.3 North America
      • 4.3.1  United States (AAA/Aaa)

Risk

Government bonds are usually referred to as risk-free bonds, because the government can raise taxes or simply print more money to redeem the bond at maturity. Some counterexamples do exist where a government has defaulted on its domestic currency debt, such as Russia in 1998, though this is very rare.

As an example, in the US, Treasury securities are denominated in US dollars and are the safest US dollar investments. In this instance, the term risk-free means free of credit risk. However, other risks still exist: such as currency risk for foreign investors (for example non-US investors of US Treasuries would have received lower returns in 2004 because the value of the US dollar declined against most other currencies). Secondly, there is inflation risk - in that the principal repaid at maturity will have less purchasing power than anticipated if the inflation outturn is higher than expected. Many governments issue inflation-indexed bonds, which protect investors against inflation risk.

An example of somewhat risky bonds issued by a government can be given with countries that have less than perfect capabilities of conducting financial policies. Such an example is Bulgaria due to its being dependent on the world economy and economic institutions much more than, say, the US. Some of this country's bonds were only given an A-scale rating after 2004. As of February 2006 Standard & Poor's rates Bulgaria's long-term debt denominated in domestic currency at BBB+. And this rating is the result of almost a decade of constantly decreasing risk (and increasing ratings). We should also note that this country's short-term debt is in fact currently rated A.

Issuance

Government bonds are issued through agencies that are part of the government's treasury department, for example

  • Bunds are bonds issued by the German Finance Agency, denominated in euros
  • Gilts are bonds issued by the UK Debt Management Office and are denominated in sterling
  • US Treasuries are issued by the Bureau of the Public Debt

See also

  • Government debt
  • List of government bonds


List of government bonds from the main issuers

for a comprehensive list of government bonds, see List of government bonds
Currency Country Generic Name or Nickname Rating (S&P/Moody's) Negociable debt at mid-2005 (US dollar bn equivalent) Government financial liabilities as % of GDP (end 2003 - source : OECD) Issuer Internet site
Yen  Japan JGBs AA-/A2 6,666 157.5% Ministry of Finance (MoF) Site
US dollar  United States US Treasuries AAA/Aaa 4,000 62.5% Bureau of the Public Debt Site
Euro  Italy BTPs AA- with negative outlook/Aa2 1,530 120.9% Dipartimento del Tesoro Site
Euro  France OATs AAA/Aaa 1,300 71.2% Agence France Trésor Site
Euro  Germany Bunds AAA/Aaa 1,020 65.1% Finanzagentur GmbH Site
Pound sterling  United Kingdom Gilts AAA/Aaa 703 42.0% UK Debt Management Office Site
Main credit ratings

Asia

 Japan (AA-/A2)

Issued By: Ministry of Finance (MoF)

  • Japanese Government Bonds (JGBs)
    • Revenue Bonds/Straight Bonds
    • Financing Bills
    • Subsidy Bonds
    • Subscription Bonds
    • Contribution Bonds
    • Demand Bonds (kofu kokusai)

Ministry of Finance

Europe

Eurozone

 France (AAA/Aaa)

Issued By: Agence France Trésor, the French Debt Agency

  • OATs
    • BTFs - bills
    • BTANs - 1 to 6 year notes
    • Obligations assimilables du Trésor (OATs) -
    • TEC10 OATs - floating rate bonds indexed on constant 10year maturity OAT yields
    • OATi - French inflation-indexed bonds
    • OAT€i - Eurozone inflation-indexed bonds

Agence France Trésor

 Germany (AAA/Aaa)

Issued By: Finanzagentur GmbH, the German Finance Agency

  • Bunds
    • Bubill - bills
    • Bundesschatzanweisungen (Schätze) - 2 year notes
    • Bundesobligationen (Bobls) - 5 year notes
    • Bundesanleihen (Bunds) - bonds

Finanzagentur GmbH

 Italy (AA- "with negative outlook"/Aa2)

Issued By: Dipartimento del Tesoro

  • BTPs
    • Buoni Ordinari del Tesoro (BOTs) - bills up to 1 year
    • Certificati del Tesoro Zero Coupon (CTZ) - bills up to 2 year
    • Buoni del Tesoro Polianuali (BTPs) - bonds
    • Certificati di Credito del Tesoro (CCTs) - floating rate notes
    • BTP Indicizzato all'Inflazione - inflation linked bonds

Dipartimento del Tesoro

 United Kingdom (AAA/Aaa)

Issued By: UK Debt Management Office

  • Gilts
    • Conventional Gilts
    • Index-linked Gilts
    • Double-Dated Gilts
    • Undated Gilts
    • Gilt Strips

UK Debt Management Office

North America

 United States (AAA/Aaa)

Issued By: Bureau of the Public Debt

  • US Treasuries
    • Treasury bill
    • Treasury note
    • Treasury bond
    • TIPS
    • Savings bond

Bureau of the Public Debt

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