Sovereign Bonds

Sovereign bonds are government-issued debt instruments that finance national deficits. They share the same trading infrastructure as corporate bonds but are backed by entire nations rather than individual corporations — and unlike corporate bonds, they cannot default.

What They Are

When a country runs a budget deficit, it needs to borrow money to cover the gap. The government issues sovereign bonds: players and corporations buy them, the government gets cash, and bondholders receive regular coupon payments until the bond matures.

Currently, the US and UK issue sovereign bonds. More countries may be added over time.

Automatic Issuance

Sovereign bonds are issued automatically every 12 turns (once per game quarter). You cannot manually trigger issuance — it happens on schedule regardless of who is in office.

Each quarter, the issuance amount has two components:

Deficit component:

quarterlyAmount = annualDeficit / 4
deficitAmount = floor(quarterlyAmount / 1000) × 1000

If the budget is in surplus, this component is zero.

Rollover component: Any sovereign bonds maturing in the upcoming 12 turns are refinanced. Their total face value is reissued as new bonds. This keeps the bond market liquid even when the country is running a surplus — the float replenishes automatically.

Coupon Rate

Sovereign bonds use the central bank prime rate directly as their coupon rate:

couponRate = primeRate (no credit spread)

Unlike corporate bonds, there is no credit risk premium. Sovereigns pay exactly the prime rate. When the Central Bank Chair raises rates, newly issued bonds carry higher coupons.

Bond Structure

Field	Value
Face value	$1,000 per unit
Maturity	48 turns (1 game year)
Market price at issuance	1.0 (par)
Units start in	Public float (available to buy immediately)
Can default	No — guaranteed by the state

Budget Integration

When sovereign bonds are issued, the national budget is updated immediately:

Principal increases by the total face value issued
Annual interest cost increases by couponRate% × totalIssued
Surplus decreases (or deficit increases) by the new interest cost
Debt-to-GDP ratio updates, which affects the country's credit rating

When bonds mature, the process reverses — principal and interest obligations are reduced, improving the surplus figure.

Per-Turn Processing

Each turn, the bond system:

Issues any scheduled sovereign bonds (every 12 turns)
Pays coupon interest to all holders from the national treasury
Updates market prices based on the current prime rate
Settles matured bonds (returns face value to holders, reduces national debt)
Records history snapshots

Sovereign bond coupon payments are guaranteed by the state. If the treasury cannot cover them, the deficit increases automatically — effectively monetizing the debt. There is no sovereign default mechanic.

Market Price Dynamics

Sovereign bond prices move on the same formula as corporate bonds:

price = (couponPayment / (currentPrimeRate × faceValue)) × faceValue

Rising prime rates → falling prices (existing bonds become less attractive)
Falling prime rates → rising prices (existing bonds offer above-market coupons)
Near maturity: Price converges toward par regardless of rates

Buying Sovereign Bonds

From any country's stock exchange page, you can browse available sovereign bonds and buy units:

Players: Purchase from personal cash, receive coupon payments each turn
Corporations: Purchase as an investment, coupons flow into liquid capital (use ?corporationId= query param)

There is no minimum purchase amount beyond 1 unit ($1,000).

How National Debt Affects the Economy

High sovereign debt has real economic effects on corporations:

Debt-to-GDP	Effect on corporate margins
Below 50%	No penalty
50%–100%	-0.5% per 10 percentage points
Above 100%	-2.5% base + -1% per additional 10 pp, capped at -15%

This means a heavily indebted country actively hurts every corporation operating there. Passing legislation to reduce the deficit (raising taxes or cutting spending) improves conditions for corporations across the board.

Conversely, deficit spending provides a short-term stimulus: +0.5% to all corporate margins per 1% of GDP deficit, capped at +5%.

Strategic Uses

Income strategy: Sovereign bonds are the safest income-generating investment in the game. No default risk, predictable coupon payments, and automatic maturity settlement.

Rate speculation: Buy when prime rates are high (prices are depressed) and sell when rates fall. The Central Bank Chair's rate decisions directly move sovereign bond prices.

Fiscal politics: If you hold significant sovereign debt, you have a financial interest in keeping the country solvent. Debt-reducing legislation benefits both your bond portfolio and your corporate sectors.