MPV - 'Edward Altman: Where We Are In The Credit Cycle'

Originally published August 5, 2019

By Edward Altman

What Is a Benign Credit Cycle?*

By my definition, benign credit cycles are periods when most if not all four aspects of the market are incentivizing major growth in the supply and demand for credit. That means three or more of the following:

1. Low and below-average default rates
2. High and above-average recovery rates on actual defaults
3. Low and below-average yields and spreads required from issuers by investors
4. Highly liquid markets in which the riskiest credits can issue considerable debt at low interest rates

At the midpoint of

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