Implied Default Probabilities

Are you fed up with rating agencies telling you which companies and bonds are junk, after they've gone belly up?

Do you suspect that the agencies aren't really as independent as they claim to be, since they get paid by the firms whose ratings they report on, and are afraid to bite the hand that feeds them?

Do you wish that a AAA rating meant the same thing in good times and bad, so you could objectively say "this investment won't default" instead of "investment A is better than investment B, but that doesn't mean A is very good"?

Of course you do. But until now, S&P, Moody's and Fitch had the ratings game pretty much to themselves, and the only way to get independent, accurate and timely credit information was to hire your own team of credit analysts. And hope they knew how to do their job, which is risky, and expensive.

Now there's a much better way: let the market tell you the probability a company is going to go bankrupt. After all, as they say, the market is always right. And it certainly is independent. But how can you hear what the market is saying? By subscribing to Savvysoft's Market Implied Default Probabilities.

Savvysoft's Market Implied Default Probabilities are daily assessments of a company's risk of going bankrupt. We take market prices of traded securities, like corporate bonds and default swaps, and plug them into our sophisticated TOPS Credit pricing models to calculate the probability of default the market is using to come up with traded spreads. It's a simple concept, really: the wider the credit spread, the higher the market says is the risk of default. The mathematics behind the calculation isn't as simple, but you don't need to deal with that: a subscription to Savvysoft's Market Implied Default Probabilities provides you with a daily email or download of the default probabilities for companies and sectors you're interested in, which you can then use in your analysis in any way you choose.

Savvysoft offers two versions of the service. First, FreeCreditDerivatives.com is a totally free web site which posts the implied default rates on US investment grade corporate indices. And at CorporateDefaults.com you can sign up for default probabilities, as well as credit curves, for individual issuers.

If you'd like more information, please contact us to discuss how Savvysoft's Market Implied Default Probabilities can help you.