Who is considered the riskiest borrower in terms of investments?

High-yield bond issuers are regarded as the riskiest borrowers in the context of investments due to several factors. High-yield bonds, also known as junk bonds, are issued by companies or entities that have lower credit ratings, typically below investment grade. This indicates that these issuers are perceived to carry a higher risk of default compared to those with higher credit ratings.

Investors demand higher yields for these bonds to compensate for the increased risk associated with investing in them. The underlying financial health of high-yield bond issuers is often unstable, and they may struggle with cash flow issues, resulting in a greater likelihood of failing to meet their debt obligations. This risk profile makes high-yield bond issuers the riskiest borrowers in the investment landscape.

In contrast, the U.S. government is viewed as a very low-risk borrower, given its power to issue currency and the backing of its overall economy. Retail borrowers typically face a range of credit risks but are generally not classified as high-risk in the same manner as high-yield issuers, who can have fundamental financial challenges. Investment-grade corporate entities, while carrying some risk, are considered stable and more reliable compared to high-yield borrowers, as they are rated higher by credit-rating agencies