Credit Migration Risk

CFA Level III Fixed Income
#1

Dear all,

The definition for credit migration risk is somewhat unclear to me in the cfa materials / schweser

Investment-grad bonds can experience deterioration in their credit quality - called credit migration risk - and as they become riskier, their credit spread typically widen / increase.

Credit migration risk if credit quality is downgraded

Credit migration risk refers to the risk a bond can decline in credit quality and bind rating.

So is this more related to a decline in credit quality of this specific issuer or more to the risk of a rating downgrading? Is spread risk then only the risk that the general credit environment deteriorates without decline in credit quality of this specific issuer?

#2

Credit migration relates to the credit risk of the issuer.

The more riskier the general credit environment, the more riskier the credit quality of the issuer becomes, and it bonds will experience credit migration which is the major risk investment grade bonds investors are exposed to (spread risk).