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Governments use them to raise funds that can be spent on new projects or infrastructure and investors can use them to get a set return paid at regular intervals.

Furlough vs leave without pay. A government bond or sovereign bond is an instrument of indebtedness issued by a national government to support government spending. It generally includes a commitment to pay periodic interest called coupon payments and to repay the face value on the maturity date. A government bond is a type of debt based investment where you loan money to a government in return for an agreed rate of interest.

The term government bond is used to describe the debt securities issued by the federal government such as us treasury bills notes and bonds. Federal government bonds in the united states include savings bonds treasury bonds and. For example a bondholder invests 20000 called face value into a 10 year government bond with a 10 annual coupon.

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