A DEBT instrument issued by a governmental authority as a funding mechanism. Government bonds are generally issued on a fixed or floating rate, COUPON BEARING, basis, with maturities extending from 1 to 30 years; those within the 1 to 10 year sector may be referred to as government notes. Some countries also feature INFLATION LINKED SECURITIES within their government issuance programs. Government bonds issued by industrialized nations are generally quite LIQUID (and may be very liquid in the BENCHMARK) and extremely creditworthy, with virtually no risk of DEFAULT. See also GOVERNMENT BILL.

More On This Topic

Link to This Definition
Did you find this definition of GOVERNMENT BOND helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary