© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Sovereign bonds are bonds issued by governments. They can be either local-currency-denominated or denominated in a foreign currency. Sovereign bonds and sovereign debt can be used interchangeably, but sovereign debt can also refer to the total outstanding stock of a country's government debt.
The recent Greek crisis is one of too much sovereign debt. With so much debt, under reasonable assumptions, this calls into question the government's ability and willingness to repay the loans. The market's response has been to sell Greek sovereign bonds, driving up their yield, hence Greek borrowing costs, and driving their prices lower.