Professor Creates New Credit Analytical Tool
March 19, 2010
New York University Professor Edward Altman created a new credit analysis tool that will help investors and lenders estimate a company’s credit ratings and default risk probabilities, the university announced Thursday.
The new tool, called Z-Metrics, which uses 15 rating categories to evaluate the credit strength of nonfinancial entities. These rating categories are based on a firm’s probability of default for one-year and five-year horizons.
Altman said in a statement that the high rates of defaults among U.S., Canadian and European leveraged loans and junk bonds over the last five years indicate a need for credit investors to better assess credit worthiness.
Altman is the Max L. Heine Professor of Finance at NYU’s Stern School of Business and the director of research in credit and debt markets at the university’s Stern Solomon Center for the Study of Financial Institutions.
For more information on related topics, visit the following:
