Credit risk news

  • What are the 5 C's of credit risk?

    Financial institutions face different types of credit risks—default risk, concentration risk, country risk, downgrade risk, and institutional risk.
    Lenders gauge creditworthiness using the “5 Cs” of credit risk—credit history, capacity to repay, capital, conditions of the loan, and collateral..

  • What are the 5 credit risks?

    Credit risk is the potential for a lender to lose money when they provide funds to a borrower. 1.
    Consumer credit risk can be measured by the five Cs: credit history, capacity to repay, capital, the loan's conditions, and associated collateral..

  • Credit Risk
    An example is when borrowers default on a principal or interest payment of a loan.
    Defaults can occur on mortgages, credit cards, and fixed income securities.
    Failure to meet obligational contracts can also occur in areas such as derivatives and guarantees provided.
  • The major sources of credit risk are default probability and recovery.
    Together with interest rate risk, they determine the price of credit derivatives.
    In this article, we study the relative importance of these sources by testing pair-nested structural models with data from credit default swaps.
Latest Credit risk articles on risk management, derivatives and complex finance.

Are junk debt issuers facing refinancing risk?

Summary Junk debt issuers face refinancing risk into "higher for longer" rates. iShares 0-5 Year High Yield Corporate Bond ETF provides access to high yield with less duration risk.
SHYG holds a diversified portfolio of short-term high-yield bonds with predominantly BB and B credit ratings.

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What is the risk for investment grade credit?

“In many ways, the risk for investment grade credit is that the BOJ normalizes policy before the next US downturn,” according to Steve Caprio, head of European and US credit strategy at Deutsche Bank AG. “Japanese inflows have limited investment grade credit spread widening in past sell offs.

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Why did Moody's downgrade the US credit rating?

Moody’s on Friday changed its outlook on the US credit rating to “negative” from “stable” citing large fiscal deficits and a decline in debt affordability.
The move follows a rating downgrade of the sovereign by another rating agency, Fitch, earlier this year, which came after months of political brinkmanship around the US debt ceiling.

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Will credit risk replace interest-rate risk?

(Bloomberg) -- Credit risk will replace interest-rate risk as the market’s “big fear” next year, according to Mohamed El-Erian.


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