Credit Risk Management Strategy Evaluation

John is an investment manager responsible for managing a diversified portfolio for a large institutional client. Recently, he has been considering the credit risk associated with the portfolio's holdings in corporate bonds. In particular, he wishes to minimize the likelihood of significant losses due to defaults on these bonds.

In order to effectively manage credit risk, John is evaluating various strategies to enhance the portfolio's credit quality. He wants to identify which of the following credit risk management strategies would be most effective in reducing the potential for losses associated with default risk.