A Government Bond is debt issued by the government.
The Treasury Department usually issues government bonds, typically through an auction process.
Government bonds usually help fund shortfalls in the federal budget, regulate the nation's money supply and execute monetary policy. For example, like any bond issuer, the Treasury of a country considers the market’s risk and return requirements in order to successfully and efficiently raise capital.
Most government bonds are backed by the full faith and credit of the specific government, meaning that it is extremely unlikely and would really only occur if the specific government could not print additional money to pay off its debt.
Rates on government bonds affect the entire economy. This is partially because the government’s sale or repurchase of their own bonds affects the money supply and influences interest rates.
Though government bonds carry little risk of default, they do carry interest-rate risk, meaning that when interest rates rise, bond prices fall, and vice versa.
G7 bonds are generally regarded as less risky than bonds issued by other countries. Accordingly, they are often more liquid than sovereign debt from other countries and are sometimes preferred by conservative income Investors who want some international exposure.
These countries are developed countries with considerable industrial power. The bonds from these governments, accordingly, have strong nations backing them.