Yes, while extremely rare, AAA-rated bonds have defaulted. Although they represent the highest credit quality with a near 0% historical default rate, instances have occurred, particularly in specialized, private-label, or structured finance deals like certain collateralized debt obligations (CDOs) during the 2008 financial crisis. Recent examples include losses on specific commercial mortgage-backed securities (CMBS).
The safest bonds—AAA, AA, A, and BBB—have a one-year probability of default that is less than 0.1 percent.
Default Rates for Global Corporate Bonds
For example, S&P Global reported that the highest one-year default rate for AAA, AA, A, and BBB-rated bonds (investment-grade bonds) were 0%, 0.38%, 0.39%, and 1.02%, respectively.
No AAA CLO has ever defaulted in the history of the asset class, weathering the Global Financial Crisis and Covid pandemic with minimal losses.
Junk bonds, often referred to as high-yield bonds, carry higher risk due to lower credit ratings from agencies, compared to investment-grade debt. They represent debt issued by financially struggling companies and offer higher yields to compensate for the increased risk of default.
Corporate bond defaults have
According to Standard and Poor's, the trailing 12-month default rate for speculative-grade debt has been above 4% for the past two years. It was 4.8% as of August 2025. Moody's default data paints a similar picture.
Though all bonds are subject to risk, U.S. Treasuries are widely considered the safest type of bond because they have a very low risk of default.
Bond ratings indicate an issuer's creditworthiness and shape the interest investors earn based on default risk. AA+ from S&P and Aa1 from Moody's are high-quality ratings just below the top tier, signaling strong financial health and low default risk.
Conclusion. AAA-rated bonds provide a sense of safety in today's uncertain market. The default risk is usually low, and the returns are considered good, if not the best in the market. However, you must note that credit ratings are subject to change.
Federal Reserve data shows that about 23% of Americans have no debt.
With this move, all three major credit rating agencies have now downgraded the United States from their highest rating: Standard & Poor's did so in 2011, Fitch followed in 2023 and now Moody's in 2025.
Remember, bail bond agreements are legally binding. Not meeting the terms can lead to lawsuits, asset seizure, and bounty hunters looking for the defendant. The consequences of defaulting on a bail bond can last a long time and be very severe.
To illustrate the bond ratings and their meaning, we'll use the Standard & Poor's format: AAA and AA = high credit-quality investment grade; AA and BBB = medium credit-quality investment grade; BB, B, CCC, CC, C = low credit-quality (non-investment grade), or “junk bonds”; D = bonds in default for non-payment of ...
Corporate AAA borrowers may make good on their debts 99%+ of the time, but 6 CMBS SASB pools have defaulted so far in 2024, generating $600M+ of losses on $1+ billion of loans. This 60% loss severity compared to 30-50% subordination buffers, means that AAA bondholders have taken losses.
Warren Buffett views bonds as a safe haven for cash, often recommending a 90/10 portfolio (90% S&P 500 index fund, 10% short-term government bonds) for average investors, while Berkshire Hathaway itself holds large amounts of U.S. Treasury bills for capital preservation and to earn competitive yields, especially when stocks are expensive. He favors short-term Treasuries (T-bills) due to low interest rate risk and high liquidity, using them to park cash while waiting for better stock opportunities, rather than as a primary growth engine.
Bonds that carry an AAA rating are considered extremely safe, almost as safe as lending to the government itself. Companies that achieve this rating usually have strong balance sheets, predictable earnings and a long history of reliable business performance.
Corporate bonds carry a risk of issuer default, influenced by their ability to repay debt. Low liquidity in corporate bonds can result in significant price volatility.
The SEC's Office of Investor Education and Advocacy is issuing this Investor Bulletin to educate individual investors about high-yield corporate bonds, also called “junk bonds.” While they generally offer a higher yield than investment-grade bonds, high-yield bonds also carry a higher risk of default.
U.S. Treasuries are considered among the safest available investments because of the very low risk of default. Unfortunately, this also means they have among the lowest yields, even if interest income from Treasuries is generally exempt from local and state income taxes.
Picking the Right Bonds & Credit Ratings
U.S. government securities such as U.S. Savings Bonds are considered risk free since the chance of default is virtually zero. On the other hand, corporate bonds are considered to have more risk so they offer higher returns than U.S. Savings Bonds.