In effect, duration refers to the number of years half of the principal is outstanding. Duration determines the degree of sensitivity to interest rate changes. The longer the duration, the greater the sensitivity of principal to interest increases or decreases. In other words, the price of publicly traded bonds adjusts up or down based on interest increases or decreases and the duration of the bond. Interest rates up, bond prices down.
Credit quality refers to the risk of repayment and varies tremendously.
United States Treasury Obligations are considered risk-free from a repayment perspective. Non-investment grade debt is referred to as High Yield Debt or Junk Bonds. A vast array of international opportunities exist in the fixed income area. So-called sovereign debt consists of foreign government debt which can be denominated in either the currency of the issuer, in US dollars, or in the new Euro. For the international bond investor, you must cope with credit risk, interest rate risk, and currency risk .