Risks that may arise from investing in government debt securities are as follows:

1. Interest Rate Risk or Price Risk Or Market Risk 

Interest rate risk is the risk that changing market interest rates will affect a security’s price. The market price of a security varies inversely with the corresponding market interest rates. If  the holder sells a security before it matures while the prevailing market interest rates are higher than the security’s coupon rate, the  holder may have to sell at the price less than the face value.

2. Credit Risk or Default Risk

Default risk is the risk that an issuer of a security will default, by failing to repay principal and/or interest in a timely manner.  This includes the risk that an issuer's credit rating will be lowered while the debt security has not reached its maturity. Government debt securities have very low credit risk, so their return tends to be lower than that of corporate debt securities.

3. Liquidity Risk

Liquidity risk is the risk that a debt security cannot be traded quickly enough at the appropriate price in the market. If a debt security needs to be sold quickly when the market is not liquid, it may need to be sold at a lower price. If a debt security is held until its maturity, the holder will not incur liquidity risk.

4. Inflation Risk

Inflation risk is the risk arising from a decline in purchase power. Typically, the coupon rates are normally fixed throughout the life of the debt securities. The  inflation will result in the decrease in value of the coupon interest earned in each period and the principal in the last period.