[Verse 1]
Sarah bought her government bonds, thought she'd never lose a dime
Triple-A rated corporate debt, seemed safe throughout all time
Then the headlines started breaking, companies began to fall
Default whispers in the market, now she's questioning it all
[Chorus]
Credit risk will bite you, when the borrower can't pay
Spreads expand like wildfire when the ratings slip away
Quality determines if your portfolio survives
C-R-E-D-I-T risk decides who thrives
[Verse 2]
Investment grade means BBB and everything above
Junk bonds pay you higher yields but push and comes to shove
When recession hits the pavement, speculative bonds collapse
While the treasuries keep steady, filling up the market gaps
[Chorus]
Credit risk will bite you, when the borrower can't pay
Spreads expand like wildfire when the ratings slip away
Quality determines if your portfolio survives
C-R-E-D-I-T risk decides who thrives
[Bridge]
Moody's, Fitch, and Standard Poor's
Grade the bonds from floor to ceiling
Triple-A to single-D
Shows the creditworthiness feeling
[Verse 3]
Spread's the difference over treasuries, compensation for the gamble
Higher risk demands more income, watch the basis points scramble
Correlation jumps in crisis, diversification fails
When the credit crunch is roaring, only quality prevails
[Chorus]
Credit risk will bite you, when the borrower can't pay
Spreads expand like wildfire when the ratings slip away
Quality determines if your portfolio survives
C-R-E-D-I-T risk decides who thrives
[Outro]
Duration measures interest changes
Credit spread's a different game
Know your counterparty's weakness
Before you play the bond portfolio game