Evaluating Credit Risk in a Bond Portfolio

In the context of portfolio management, credit risk is a significant consideration for investors and portfolio managers. Credit risk refers to the possibility that a borrower may default on any type of debt by failing to make required payments. It's essential for portfolio managers to actively assess the credit risk associated with securities held in their portfolios.

Discuss the main factors that a portfolio manager should consider when evaluating credit risk in a bond portfolio. Provide specific examples to illustrate your points.