The borrower is financially unstable
Bonds are generally considered a low-risk investment, but this depends on the entity issuing the bond. Treasury bonds issued by the U.S. government are as safe as it gets. Corporate bonds, on the other hand, come with more risk in exchange for higher interest payments.
If the borrower that issues a bond starts suffering financial problems, that can affect your bond's market value and whether you get your money back. For example, if you buy a corporate bond and the company goes bankrupt, you most likely won't get the full value of your bond. Issues like these are rare, but they're still something to watch out for and a sign that selling could be the best move.
You want to rebalance your portfolio
The right mix of investment assets depends on your risk tolerance, goals, and age. When any of these change, you'll need to rebalance your portfolio accordingly. In some cases, this could mean selling bonds.
Let's say you're in your 30s and investing to build a retirement nest egg. Your portfolio is 50% stocks and 50% bonds because you wanted to prioritize security. But you recently realized that your bond-heavy portfolio is limiting your returns, and since you have plenty of time until retirement, you've decided to adjust your asset allocation. You could sell some bonds and use that money to buy stocks.
