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We arrive now at the most important lesson in the chapter for anyone who wants to lend wisely rather than blindly. Because the coupon is paid out of a country's state budget, a bond is only ever as safe as the treasury behind it. A rich, well-run country pays its holders faithfully; a country whose budget is draining away may struggle, and in the worst case may stop paying altogether for a while. The game measures all of this for you with a single, easy-to-read credit rating shown right at the top of the Bonds page, and this lesson teaches you to read it like a pro.

The rating ladder

A country's credit rating is worked out from what its state budget is worth in US dollars - the more the treasury holds, the stronger the rating. Measuring in dollars rather than in each country's own money is what lets the ladder mean the same thing everywhere: a treasury holding a million rial and one holding a thousand pounds are judged on what their money is actually worth, not on how large the number looks. There are seven rungs on the ladder, and they run from rock-solid down to broken. It is genuinely worth seeing them laid out together, because the whole language of bond safety lives in these seven words.

• Prime (AAA) - a budget worth $1,000 or more. The safest tier: a treasury this healthy pays its coupons with ease.
• High grade (AA) - worth at least $800. Still very strong and comfortably able to pay.
• Upper medium (A) - worth at least $600. Solid and dependable.
• Lower medium (BBB) - worth at least $400. Respectable, but worth keeping an eye on.
• Junk (BB) - worth at least $300. Getting risky; the cushion is thin.
• Distressed (CCC) - worth below $300. A stretched treasury that could stumble.
• Default (D) - the treasury has stopped paying its holders. The riskiest state of all, regardless of balance.

You do not need to memorise the exact numbers - the page shows you the rating in plain words, right beside the country selector, with the treasury's dollar value printed underneath it. What matters is the instinct: the further down this ladder a country sits, the more you should think twice before lending it your money, and the more a wise lender demands a cheaper buying price to make up for the extra risk. A Prime treasury is a safe, boring place to park money for the daily coupon; a Distressed one might pay handsomely if you buy its bonds cheap, but you are taking a real gamble that it can keep paying at all.

Excessive Deficit Procedure: the warning zone

Long before a country ever stops paying, the game steps in with a firm safety measure designed to nurse a struggling budget back to health. If a country's budget falls below 100 in its own currency, it enters what is called the Excessive Deficit Procedure - EDP for short. Note the change of yardstick here, because it catches people out: the rating ladder above is measured in dollars of value, but the deficit procedure and default below are measured in the country's own money, so a country can be graded Distressed long before it is anywhere near EDP. While a country is in EDP, three things happen at once, automatically. All of its citizen bonuses are set to zero, so the treasury stops paying rewards out. All of its taxes are pinned at the maximum of 25%, so as much money as possible flows in. And, crucially, no taxes or bonuses can be changed by law while this lasts - the country's finances are effectively put on a strict recovery diet until things improve.

EDP is deliberately sticky, so a country cannot bounce in and out of it every few minutes. It begins when the budget drops below 100, but it does not lift again until the budget climbs back above 200. That gap between the two numbers - falling in at 100 but only recovering out at 200 - is on purpose: it forces a genuine recovery rather than a moment's lucky wobble across the line. Between 100 and 200 the country simply stays in whatever state it was already in, quietly working its way back to health.

Default: when the coupon actually stops

Now for the worst case, told plainly so it never frightens you more than it should. If a treasury's situation gets so bad that it genuinely cannot cover a coupon payment when the day comes, the country defaults on its debt. In default, coupon payments are suspended - your bonds stop paying for the time being. This is the one moment a bond truly lets you down, and it is exactly why the credit rating matters so much: default is the risk you are weighing every time you choose which country to lend to.

But even default is not the end of the story, and this is the hopeful note to finish on. A default is a pause, not a death. The moment the country's budget recovers back above 100, the treasury resumes paying its bondholders again, and your coupons start arriving just as before. So a defaulted country is not a worthless one forever - it is a treasury having a hard time, which may well recover. Brave lenders sometimes buy the bonds of a defaulted or distressed country very cheaply, betting that it will climb back and resume paying. That is a genuine strategy, but it is a gamble, and it is one to take only once you thoroughly understand this lesson.

So the safety of a bond is written in one word at the top of the page: a rating from Prime down to Default, set by what the treasury is worth in dollars. Below 100 in its own currency the country enters a recovery procedure that zeroes bonuses and maxes taxes but still pays your coupon; only an outright default actually suspends payment, and even that lifts once the budget climbs back over 100. Read the rating, respect it, and you will lend far more wisely than someone who just chases the highest number. In the final lesson we look at the powers a government itself has over its bonds - issuing more, and buying them back.