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Default
A default occurs when a borrower misses interest or principal payments on a loan or bond. Defaults can lead to losses for lenders, legal action and a sharp downgrade in the borrower’s credit rating.
Why It Matters
Default risk is why riskier borrowers must pay higher interest rates.
In India
The 2018 default of IL&FS, a large infrastructure lender, shook India’s debt markets and mutual funds.
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