Default risk

By | 2017-09-13T13:32:55+00:00 13th September 2017|

Default risk is the risk that a bond issuer may not be able to meet its contractual obligation to investors and will default (not pay) interest payments due on a bond issued by the issuer. Credit Default Swaps (CDSs) are the market’s attempt to create financial instruments out of the probability of default of an issuer.