Like ghshephard said, in general bonds aren't really risk-free. "Risk-free" is a theoretical concept. Roughly speaking, it's an assumption used to simplify fin

Like ghshephard said, in general bonds aren't really risk-free. "Risk-free" is a theoretical concept. Roughly speaking, it's an assumption used to simplify financial equations, analogous to assuming "no friction" in high-school physics problems when the friction coefficient is small enough. The usual rationale for assuming that a country will always pay back its debts is that it can print its own currency at will. But this is not the case for the euro, since an individual member country cannot freely print euros. It's also not the case for dollar-denominated bonds issued by emerging countries. Indeed, even bonds issued by the two largest and more stable powers in the world (US and Japan) aren't 100% risk-free. They might be able to keep borrowing money and not defaulting, but likely at the cost of inflating their currencies, i.e, investors still get the nominal dollars and yen back, but they will be worth less in terms of goods. The closest thing to risk-free is an US Treasure bill.