Have one heard these A, AA, or AAA bond can default. If there is a possibility, what should I do? buy US treasure only?
Have one heard these A, AA, or AAA bond can default.
Yes they do default. The other aspect is they can get downgraded over the period. So what you are holding as AA bond, can quickly become a BB; if you sell, you would potentially make loss.
At times its an isolated instance, at times it is compounded by some other factors. For example 2008 downturn, quite a few Mortgage backed securities lost money. Quite a few other bonds lost their ratings. Investopedia has a good article.
Enron is another classic example with bonds rated high and going bust overnight.
If there is a possibility, what should I do?
In today's world, there is nothing that is 100% safe. So the best strategy is to diversify into multiple unrelated class of instruments.