A bond is a debt security, it is basically an IOU where the bond holder is the lender and the issuer is the borrower.
A bond investment is exposed to lesser risk compared with equities or preference shares investment of the same counterpart as if you base them on seniority, Bond>Preference Shares>Equities. Which means upon company liquidation, the bond holders will have a higher priority in getting more residual back. The Lehmen Brother crisis is a good example, the shareholders didn't get any residual back , the preference shareholders didn't get any residual, but the bond holders got back 30% of their initial investment.
As with all investments, there is a default risk, which in the bond context, the risk that the issuer(company) could go bankrupt and hence can no longer honor its debt obligations. So despite the seniority, there is still a chance that you may lose your whole ......