Sovereign bonds are debt securities issued by a national government to raise funds for various public projects and expenditures. When investors buy these bonds, they are essentially lending money to the government in exchange for periodic interest payments and the return of the bond's face value at maturity. These bonds are considered low-risk investments, as they are backed by the government's ability to tax its citizens and generate revenue. The interest rates on sovereign bonds can vary based on the country's credit rating and economic stability. Countries with strong economies, like the United States or Germany, typically offer lower interest rates due to their perceived reliability, while those with weaker economies may need to offer higher rates to attract investors.