default risk

Default risk

The risk that an issuer of a bond may be unable to make timely principal and interest payments. Also referred to as credit risk (as gauged by commercial rating companies).

Default Risk

The risk that a debtor will be unable to pay back its loans. Default risk goes up if a debtor has large number of liabilities and poor cash flow. Generally speaking, companies and persons with high default risk stand a greater chance of a loan being denied and pay a higher interest rate on the loans they do receive. See also: Bankruptcy.

default risk

The possibility that a borrower will be unable to meet interest and/or principal repayment obligations on a loan agreement. Default risk has a significant effect on the value of a bond: if a borrower's ability to repay debt is impaired, default risk is higher and the value of the bond will decline.
References in periodicals archive ?
Analyzing the basic determinants of sovereign default risk is especially important for emerging market economies for which information is more opaque and lending is subject to a greater lack of information.
Credit scores don't stay constant in terms of the default risk represented by a borrower with a particular score.
In this edition, FactorTrust analyzed Consumer Stability trends and their impact on default risk.
Global Banking News-August 8, 2013--Banking union will not solve default risk issues, says investor survey(C)2013 ENPublishing - http://www.
Default risk covers over 80 per cent of risks in an average bank's banking book asset portfolio.
The results both build a case for diversification and illustrate that industry selection is a critical component of managing portfolio default risk.
Likewise, we expect that the rational credit suppliers will respond to the bad performance of the sovereign borrowers by charging more to compensate for the default risk of the sovereign borrowers in their external debt.
The credit union already performed assessments on default risk, interest rate risk and product profitability.
From a credit management perspective, the most important actions taken by survey respondents to reduce payment default risk in emerging markets include checking buyer's creditworthiness (64%), monitoring buyer's credit risk (45%) and checking buyer's payment track record (43%).
Summary: DUBAI - Dubai's default risk fell to the lowest level since Dubai World announced a debt restructuring in 2009, as Emirates airline sold bonds and local entities reach debt accords.
More harmful still is that a very strict definition of a naked sale would keep investors who finance public investment or companies that enter into contracts with sovereign nations or with state-owned companies from hedging the default risk of their counterparties.
July 27 2010 -- Fitch Ratings has today said the default risk for Smithfield Foods Inc and other food companies is no longer of immediate concern.