sovereign debt



Government debt, especially that held in bonds denominated in foreign currencies.

Under the doctrine of sovereign immunity, the repayment of sovereign debt cannot be forced by the creditors and it is thus subject to compulsory rescheduling, interest rate reduction, or even repudiation. The only protection available to the creditors is threat of the loss of credibility and lowering of the international standing (the sovereign debt rating) of a country, which may make it much more difficult to borrow in the future.

Use sovereign debt in a sentence

  • The sovereign debt was a non factor in the decision making process as we were only concerned with cash transfers in the near future.

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  • Some countries may hold a very high sovereign debt and may allow your company a little extra leeway if you help pay it off.

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  • Many people believe that China has too great a hold on the US economy because of all the US sovereign debt it owes to China.

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