Credit risk
The risk that a borrower pays late, misses interest or fails to repay debt.
Definition
The risk that a borrower pays late, misses interest or fails to repay debt.
Why this concept matters
It explains why two bonds with the same maturity may offer different yields.
What to watch
A high yield may compensate for greater default risk.
Simple example
Lending €1,000 to a weaker issuer may offer more interest but greater risk.
Example currency : France (EUR). The reference country controls the example currency.
Explore the guides →