A government security any debt instrument issued by a central government, including bills, notes and bonds, whether discounted, variable- or fixed-rate, negotiable or nonnegotiable.  Central governments are generally the largest single issuers of debt securities in their respective domestic market, which are sold to domestic and foreign individuals, banks, dealers and institutional investors.  Government debt securities are backed largely by the tax-raising power of the issuing central government.

Government Bills, Notes and Bonds of Germany, France and Spain
Type Germany France Spain
Bill Bubill (6-12 Mo) BTF (13, 26 and 52 Wk) Letra del Tesoro (3, 6, 9, 12 Mo)
Note Bobl (5 Yr); Schatz (2 Yr) BTAN (2-5 Yr) Bono del Estado (3, 5 Yr)
Bond Bund (10-30 Yr) OAT (≥ 2-50 Yr) Obligacion del Estado (10, 15, 30 Yr)

The marketable debt securities of a central government are the yield benchmark in most domestic markets and comprise the domestic yield curve since they are:

  1. The marketable debt obligations of the most creditworthy domestic issuer;
  2. The largest and most liquid issues in the domestic market; and
  3. Span the full range of available maturities – up to 30 years in the German market.

As the key market benchmark, other domestic and foreign issuers base the pricing of their securities on the yield of the government issue of equal maturity as seen in the respective yield spread.  Government securities are also the principal instruments used by central banking systems in their operation of open market operations and conducting monetary policy.

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