Just like any investment available in the market, bond investments can go south. If the bond issuer has a poor credit rating, the risk of default is more significant. These bonds typically pay a higher interest rate than bonds with an extended maturity date. Bond defaults can happen when a company stops paying interest on a bond or, worse, does not repay the principal at maturity.  While treasury securities are considered risk-free because the credit of the US government backs them, corporate bonds default on a regular basis. When a company defaults, the government is under no obligation to and rarely rescues the company.