The danger (risk) that some unexpected event will take place and increase the credit risk of an issuer, hence badly affecting the issuer’s bond rating and the value of its outstanding bonds. In other words, event risk constitutes an exposure to loss from a change in the credit quality of an issue or issuer due to some “designated event” such as a merger or acquisition, product failure, leveraged buyout (LBO), or some other occurrences that have a significant impact on the issuer’s operations or capitalization.
March 15, 2025
