Democracies are meant to command greater sovereign credibility in international markets, and free and fair elections are a fundamental component of democracy. And yet, although the literature arguing for a “democratic advantage” in credit markets puts electoral accountability as the cornerstone of the democratic credible commitment, the quality of electoral institutions in sovereign risk is understudied. This is particularly surprising given that new democracies expend considerable effort trying to assure international audiences of the soundness of the electoral process, often inviting in third-party election monitors to observe their elections. For emerging democracies, under what conditions do international election observers contribute to this credibility? We argue that for new democracies and hybrid regimes, international election observation ought to reduce investor uncertainty around yields of sovereign debt. However, this depends on the nature of the observers' verdict, with positive assessments associated with lower risk and negative assessments associated with higher risk. Moreover, if different observer groups disagree in their assessments, this can send a mixed signal which actually increases the volatility in sovereign debt. We test this argument using novel data on the presence, identity and verdicts of international election observers.