Default Probabilities According to the Bond Market

Hans Byström, Oh Kang Kwon

Research output: Working paper/PreprintWorking paper

Abstract

In this paper we describe a simple way of analytically computing entire ìterm structures of default probabilities using information embedded in the corporate bond market data. This market-based approach of estimating the creditworthiness of firms gives probabilities of default at various maturities, and has the advantage over traditional credit ratings in that it is dynamic and forward looking.
Original languageEnglish
PublisherDepartment of Economics, Lund University
Publication statusPublished - 2005

Publication series

NameWorking Papers, Department of Economics, Lund University
No.7

Subject classification (UKÄ)

  • Economics

Free keywords

  • bond market
  • default probability term structure

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