Credit risk is a critical risk component embedded in bonds. It comprises default risk and recovery risk for these bonds which usually offer investors fixed periodic interest payments and principal payback at maturity.
The default risk represents the probability that the promised interest or principal payments may not be made by the issuer. In the case of late or missing payments, the recovery risk refers to how much the investors would eventually receive from the issuer at the final settlement.
Already a subscriber? Log in
Read the full story and more at $9.90/month
Get exclusive reports and insights with more than 500 subscriber-only articles every month
ST One Digital
$9.90/month
No contract
ST app access on 1 mobile device
Unlock these benefits
All subscriber-only content on ST app and straitstimes.com
Easy access any time via ST app on 1 mobile device
E-paper with 2-week archive so you won't miss out on content that matters to you