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Análise CyC

Expected default in Western Europe an USA

Since the beginning of the year, the Expected Default Frequency of most of the countries has shown some volatility. Nevertheless, the general tendency has been that of improvement.
Analisis Credito y Caución
Madrid - 15-nov-2010

One of the most important factors that any business needs to know is the trend in insolvencies in their markets. The following Expected Default Frequency [EDF] chart is based on listed companies in the markets referred to, and the likelihood of default across all sectors within the next year. In this context, default is defined as a failure to make a scheduled payment, or the initiation of bankruptcy proceedings. Probability of default is calculated from three factors: market value of a companys assets, its volatility and its current capital structure. As a guide, the probability of one firm in a hundred defaulting on payment is shown as 1%.

Since the beginning of the year, the EDF values of most of the countries surveyed have shown some volatility from month to month. Nevertheless, the general tendency since January has been that of overall improvement. The August 2010 median EDFs for France and Germany are the lowest since the start of the worldwide credit crisis, in September 2008, and the latest figures for Belgium, the Netherlands, the UK and the US are, despite some increases on the previous month, still lower than in December 2009.

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