You’re not. That’s why BBB is investment grade. (When you get to A, the default rate falls to 0.1 to 0.5 percent, AA only DBRS with a 1% default rate and AAA with none in that period.)
Go a step down to BB and you’re talking like one in twenty offs of default. (Unless it’s DBRS, in which case it’s one in three.)
Note that default doesn’t mean you lose everything. Conventional recovery estimates are 40%. But the idea of investment grade is you can basically assume that after taking into account interest paid on a portfolio, you should never lose capital.
You’re not. That’s why BBB is investment grade. (When you get to A, the default rate falls to 0.1 to 0.5 percent, AA only DBRS with a 1% default rate and AAA with none in that period.)
Go a step down to BB and you’re talking like one in twenty offs of default. (Unless it’s DBRS, in which case it’s one in three.)
Note that default doesn’t mean you lose everything. Conventional recovery estimates are 40%. But the idea of investment grade is you can basically assume that after taking into account interest paid on a portfolio, you should never lose capital.