Riigivõlakiri

Riigivõlakiri, often translated as government bond, is a debt instrument issued by a national government. By purchasing a riigivõlakiri, an investor essentially lends money to the government. In return, the government promises to repay the principal amount of the loan on a specified maturity date and typically pays periodic interest payments, known as coupons, to the bondholder. The terms of a riigivõlakiri, including the interest rate, maturity date, and face value, are clearly defined in the bond's prospectus.

Governments issue riigivõlakirjad to finance their expenditures, which can include public projects, infrastructure development, or to cover budget deficits. They are considered relatively safe investments because they are backed by the full faith and credit of the issuing government. However, the risk associated with a riigivõlakiri can vary depending on the financial stability and creditworthiness of the country. Countries with strong economies and stable political systems typically have lower borrowing costs, meaning their riigivõlakirjad offer lower yields. Conversely, countries with higher perceived risk may need to offer higher interest rates to attract investors.

Investors in riigivõlakirjad include individuals, institutional investors such as pension funds and insurance companies, and other governments. The secondary market for riigivõlakirjad allows investors to buy and sell these instruments before their maturity date, with prices fluctuating based on market conditions, interest rate changes, and the issuer's credit rating. The yield on a riigivõlakiri is inversely related to its price.