Government bond

A bond issued by a government, the strongest credit at home

In detail

A government bond is issued by a national government and repaid out of tax revenue, so it is treated as the strongest credit within that country. That safety usually means a lower yield than other bonds. Some countries also issue bonds that only individuals can buy, in small amounts. Prices move daily with the country's finances and its interest-rate policy.

Example

A $1 million ten-year government bond at 1% pays $10,000 a year and returns $1 million after 10 years.

Differences by country

Japan — Japan issues retail government bonds that only individuals can buy, from 10,000 yen, paying interest every six months.

South Korea — Since June 2024 Korea has issued savings bonds that only individuals can buy, from ₩100,000, in 5, 10 and 20-year terms. Held to maturity, the interest is taxed separately at 14% (as of 2026).

Related terms

Bond Corporate bond Credit rating Floating rate note Korea Savings Bond

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For learning, not investment advice. Decisions are your own.