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Yukyung Choi
Associate Director-Quantitative Research, Credit Risk Analytics
Weekly Market Outlook: Business Debt's Mild Rise Differs Drastically from 2002-2007's Mortgage Surge
Fed Chairman Jerome Powell recently addressed the issue of business borrowing. In a May 20 speech, Mr. Powell suggested that, by itself, the new record high ratio of nonfinancial-corporate business debt to GDP is much less of a risk to systemic financial liquidity than was home mortgage debt's record high 100% of disposable personal income from 2007.
Weekly Market Outlook: Earnings Slump Would Unmask Dangers of High Leverage
According to the Federal Reserve's “Financial Stability Report” of May 2019, not only has the outstanding debt of nonfinancial businesses outpaced nominal GDP during the past 10 years (or since 2008), but the growth of debt has been skewed toward riskier firms.
Dealing With Fallen Angel Risk
We test the early warning power of the CreditEdge Deterioration Probability (DP) metric for Fallen Angel downgrades.
Weekly Market Outlook: Credit May Again Outshine Equities at Divining Markets' Near-Term Path
During a week of heightened equity market volatility, the corporate credit market was relatively calm. As of May 8's close, the credit market had yet to sense much collateral damage from an intensification of the trade conflict between China and the U.S.
Weekly Market Outlook: Not Even the Great Depression Could Push the Baa Default Rate Above 2%
The now positive trend of Baa-industrial credit rating revisions is nearly diametrically opposed to the negative trend of high-yield rating changes.
Weekly Market Outlook: Benign Default Outlook Implies Profits Will Outrun Corporate Debt
A high ratio of corporate debt to GDP is tolerable as long as a material contraction of core pretax profits is avoided. History shows that the ratio of corporate debt to core pretax profits performs better at explaining high-yield defaults than does the ratio of corporate debt to GDP.
