Corporate bonds tend to be riskier investments than government bonds. This is mainly because corporate bonds are issued by companies, which have a higher chance of defaulting on debt payments compared to governments. Governments can raise taxes, print money, or otherwise increase revenue to meet their obligations, thus lowering their default risk. In contrast, companies may face financial difficulties making it harder to repay bonds. Several specific risks contribute to the higher risk of corporate bonds versus government bonds:

• Credit risk: The possibility that a company will default on its bond payments is greater than that of a stable government.
• Interest rate risk: Corporate bonds tend to be more sensitive to interest rate changes, which can impact bond prices.
• Liquidity risk: Corporate bonds can be less liquid and harder to sell than government bonds.
• Lack of insurance: Corporate bonds are not insured like some other investments, so investors can lose principal.

Because of these risks, corporate bonds often offer higher yields as compensation, while government bonds provide greater safety and stability but typically lower returns. In summary, government bonds are generally safer investments due to lower credit risk and higher liquidity, whereas corporate bonds are riskier because of greater likelihood of default and other risks, but can yield higher returns to compensate for those risks.