Credit risk: is the primary concern for bond investors (bondholders), revolving around the potential failure of the issuer to pay the interest and principal of the bond on time as announced. The redemption of the bondholder’s investment value relies on the handling of collateral (if any) and decisions made by competent authorities. There is a possibility that the bondholder may not be able to fully recover their investment value.
Liquidity risk: is the inability of the bondholder to immediately sell the bond and convert it into cash at the desired price. This risk also encompasses the possibility of trading the bond for less than the original investment value, influenced by factors like market demand, interest rate fluctuations, and the operating results of the Issuer.
Interest rate risk: is the potential impact of adverse changes in market interest rates on the value of a bond. When interest rates rise, the value of the bond decreases, and vice versa.
