Consider the following statements: Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be able to exercise their claims to receive payment. Statement-II: The USA Government debt is not backed by any hard assets, but only by the faith of the Government. Which one of the following is correct in respect of the above statements?

Statement-I: Correct. If the USA defaults on its sovereign debt, holders of US Treasury Bonds cannot realize payment of principal/interest as promised; in that sense, they cannot effectively exercise their payment claims.
Statement-II: Correct. US Government debt is a sovereign promise backed by the full faith and credit of the US Government, not by earmarked hard assets.
Link: Statement-II explains Statement-I in the exam sense: because Treasury bonds are backed only by the Government’s sovereign credit/faith and not by specific hard assets, a default would leave bondholders dependent on that promise and unable to enforce payment from any underlying asset pool.
Therefore: Both statements are correct and Statement-II explains Statement-I.