Compared to other bonds, such as those issued by the government, corporate bonds are riskier, but they also yield higher returns as a result. Corporate bonds are among the riskiest forms of bonds due to a number of factors, including: Risk of inflation: When there is inflation, the corporate bond's rate of return may underperform interest rates, resulting in meager returns or a decreased principal amount. Therefore, lending your money will be worthless. Credit risk: In the event of insolvency or even a slowdown in the economy, the issuer can fail to make interest payments. Market risk: The corporation could lose value when the market swings. Risks associated with interest rates: When interest rates increase, bond prices decline to reflect the equal coupon rate that was being given before to the fluctuation.