QUICK DEFINITION
Default is a failure by a borrower to meet a contractual debt obligation according to its terms.
WHY IT MATTERS
Why Default matters in bond markets
Default risk directly affects bond recovery values, credit spreads and portfolio loss expectations.
MARKET CONTEXT
How to think about it
Bond investors use default as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Default important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Default risk directly affects bond recovery values, credit spreads and portfolio loss expectations.