Current Conditions in Global Credit Markets - NYU Stern School of ...

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Factors Affecting the Transformation of Credit Markets in Last Few Years • Massive Global Liquidity – Petrodollars, Foreign Governments, Financial Institutions, Global Money Supply Expansion, etc. • Explosion of Hedge Fund Activity • Frenetic Activity in M&A/LBO transactions • Growth of the Institutional Loan Market, esp. Leveraged Loans • Easy Credit Standards by both Bank and Non-Bank Lenders • Record Low Required Yield Spreads in a Higher Credit Risk Profile Environment 4
Factors Affecting the Transformation of Credit Markets in Last Few Years • Rapid Growth in Derivatives and Synthetics, esp. CDOs • Historically Low Default Rates and High Recoveries • Extremely Low Equity and Debt Volatility • Globalization of Information and Technology • Escalating Leverage Throughout the Credit Markets in Search of Alpha 5
Page 1 and 2: Current Conditions in Global Credit
Page 3: Changes in the Credit Environment:
Page 7 and 8: Changes in the Credit Environment:
Page 9 and 10: Historical Default Rates Straight B
Page 11 and 12: New Issues Rated B- or Below as Per
Page 13 and 14: Historical Default Rates and Recess
Page 15 and 16: Leveraged Loan Market U.S. Distress
Page 17 and 18: Recent Large Bankruptcies U.S. Dist
Page 19 and 20: Private Equity Fundraising and Leve
Page 21 and 22: Leverage Continues to Increase Curr
Page 23 and 24: Default Rates and Losses a 1978 - 2
Page 25 and 26: Source: Authors' Compilations from
Page 27 and 28: Asset Class Returns (%) 2003 - 2006
Page 29 and 30: Distressed And Defaulted Debt as a
Page 31 and 32: SIZE OF THE US DEFAULTED AND DISTRE
Page 33 and 34: SIZE OF THE ALTMAN-NYU SALOMON CENT
Page 35 and 36: ALTMAN-NYU SALOMON CENTER DEFAULTED
Page 37 and 38: SIZE OF THE ALTMAN-NYU SALOMON CENT
Page 39 and 40: CORRELATION OF ALTMAN NYU-SALOMON C
Page 41 and 42: CORRELATION OF ALTMAN NYU-SALOMON C
Page 43 and 44: U.S. Distressed Debt Managers 2007
Page 45 and 46: U.S. Distressed Funds with European
Page 47 and 48: Investment Styles and Target Return
Page 49 and 50: Forecasting Defaults and the Defaul
Page 51 and 52: Mortality Rate Concept (Illustrativ
Page 53 and 54: Mortality Losses by Original Rating
Page 55 and 56:
US Bond Rating Equivalent Based on
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Current Conditions in Global Credit Markets - NYU Stern School of ...

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