Edward I. Altman is Director Credit and Debt Markets Research Progam, Max L. Heine Professor of Finance at the New York University, Leonard N. Stern School of Business. In his own words also known as Dr. Gloom, twin to Dr. Doom who is his NYU colleague Dr. Nouriel Roubini.
Professor Altman is an international expert on corporate bankruptcy, high-yield bonds, distressed debt and credit risk and has co-developed the Z-Metrics credit analysis tool that enables investors and lenders to more accurately estimate company credit ratings and default risk probabilities.
Listen to the complete feature Assessing the current condition and outlook for global sovereigns and the corporate credit space
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Q1 - The sovereign debt crisis, particularly in Europe; the methodology for assessing sovereign risk, the drawbacks of using traditional techniques for assessing sovereign risk, his “new” research on the sovereign area. Despite the austerity measures why he thinks (and based on his analysis), the private sector should be nurtured, subsidised in some way
Q2 - His views on correlations between debt and equity in the "current cycle" - the fact that they have grown dramatically - an investor dilemma, a conundrum …
Q3 - I ask, Should we be using the US Treasury as a benchmark for the "risk-free rate? Should we be reassessing the way we define and measure risk?"
What is the alternative? … and why Professor Altman still thinks it is a good benchmark.
Q4 - Thoughts on sovereign debt being used as the risk-free rate by European countries?
"Maybe we need to rethink the term risk-free rate because governments now are not risk free."
Q5 - Outlook on the space, the US corporate bond market and on the US corporate bankruptcy rate …