Good lord - sovereign debt crisis anyone? 2010? Sorry it's a hybrid like any bond, not just corporates bonds, that way of looking at the world is as aged as thinking that banks can always fund at LIBOR, it is emphatically BOTH a credit derivative and an interest rate derivative. To ignore credit risk on a european government bond and to use use words such as 'highly rated government bond' is completely to ignore the aftermath of the credit crunch. After all, why do european govvies trade at differing asset swap spreads if not for differing credit quality between eg Greece / Italy / Germany. Why do these spreads loosely follow sovereign CDS spreads (albeit on a mean reverting basis given liquidity factors influencing bond CDS basis). Why does the ECB impose varying haircuts on EGBs posted as collateral if not for reasons of credit quality? All bonds have credit risk, doesn't matter if they're issued by a government, or a corporate, or a bank. Sovereigns default, they have non-zero credit spreads. Please let's not repeat the mistakes of the past!
All that having been said, as the OP is forced to make a choice, I do agree that most banks will rightly classify and trade these in their rates pod. I just wanted to be clear that this is owing to being forced to classify, than for the fact that there is no credit risk in the product. Anyone who has traded through the sovereign debt crisis might feel this distinction.