Evidence from many countries in recent years suggests that collateral values and recovery rates (RRs) on corporate defaults can be volatile and, moreover, that they tend to go down just when the number of defaults goes up in economic downturns. This link between RRs and default rates has...

The defaulted and distressed, public and private debt markets in the United States swelled to a record $680 billion (face value) at the end of 2001. The market value of this 'niche' segment was approximately $400 billion. Copyright Banca Monte dei Paschi di Siena SpA, 2003

Surveys on the use of agency credit ratings reveal that some investors believe that credit-rating agencies are relatively slow in adjusting their ratings. A well-accepted explanation for this perception on rating timeliness is the through-the-cycle methodology that agencies use....