Coverage and capitalization ratios are essential in evaluating a company’s credit risk, offering insights into its ability to handle debt obligations and overall financial stability. Coverage ratios, like the Interest Coverage Ratio and Debt Service Coverage Ratio (DSCR), assess how well a company can manage its debt payments with available income and cash flow. Capitalization […]
Understanding and Managing Credit Migration Risks in Bond Markets
Credit migration risk is a critical factor in managing investments and portfolios, particularly in bond markets. Key indicators like credit ratings, Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD) are essential for assessing this risk. Economic cycles play a pivotal role, influencing credit migration trends through periods of expansion and […]