What is a sovereign default?

DEFINITION of 'Sovereign Default' A failure on the repayment of a county's government debts. Countries are often hesitant to default on their debts, since it will be difficult and expensive to borrow funds after a default event. read more

BREAKING DOWN 'Sovereign Default' Sovereign defaults are relatively rare, and are often precipitated by an economic crisis affecting the defaulting nation. Investors in sovereign debt closely study the financial status and political temperament of sovereign borrowers in order to determine the risk of sovereign default. read more

A sovereign default (/ˈsɒvrᵻn, -vərᵻn/)[n 1] is the failure or refusal of the government of a sovereign state to pay back its debt in full. read more

sovereign default. The failure of a country to fulfill its financial obligations. Since countries are not subject to bankruptcy laws, they can escape liability without any legal penalties. However, sovereign defaults are rare since it will be more expensive to borrow funds after a default. read more