Sentences with phrase «of default risk»

Income potential is higher than investment - grade bonds to offset the high level of default risk.

These bonds offer the smallest degree of default risk, clearly a major concern to most fixed - income investors who are concerned about yearly income flows.

Higher numbers mean lenders are more willing to take risks and is based on a measure of default risk.

The companies that are rated as an A have low expectation of default risk.

They should use those models, and assume efficient execution of default risk.

I am essentially lending out my $ 5000 and receiving interest payments for the term of the bond and am fully aware of default risks.

For a simple example of default risk, consider a borrower who takes out a $ 300,000 home loan.

Nearly every single loan or credit extension comes with a form of default risk.

With a bit of effort one could get a crude idea of default risk.

The estimated parameters of the default risk model, along with scenarios for the evolution of the risk factors, are used to construct stress tests on the portfolio of a rural bank.

One useful way to see these dynamics at work is to look at mortgage insurance premiums, which are entirely based on judgments of default risk.

The private - label securities channel continued to stay close to or at the record low for the amount of default risk taken.

(Treasuries are the benchmark since they are seen as being completely free of default risk).

Estimating the price of default risk by Gregory R. Duffee of the Federal Reserve Board of Governors (284K PDF)-- 30 pages — Spring 1999

The Valuation of Default Risk in Corporate Bonds and Interest Rate Swaps by Soren S. Nielsen of the University of Texas at Austin, and Ehud I. Ronn of the University of Texas at Austin (261K PDF)-- 26 pages — July 9, 1998

Last week, Jack Kahan and Steve McCarthy of KBRA wrote an important research note on this issue of default risk estimates in residential RMBS:

For creditors to be able to produce credit, the cost of default risk must be compensated, and this is done via the price of credit, the interest rate:

U.S. 10 - year treasuries are still below 3 % and the pricing of the default risk between the two indicates a similar outlook.

Please don't tell me because of the default risk, it has already been established that it is the borrowers DTI that determines the risk not their inability to pay a bank credit card at 29.9 %.»

From the bank's point of view, this is chiefly an issue of default risk rather than currency risk.

The Research Affiliates 10 - year real - return forecast for EM local debt at the end of November is 4.3 % a year, net of default risks.

Second, as mortgage foreclosures and writeoffs predictably increase in the coming quarters, we are likely to observe a fresh demand for Treasury bonds as a safe - haven because of their lack of default risk.

In our bond portfolios, we use a proprietary system of default risk for our bond holdings called Maximum Loss.

The credit score is just a summation of the report with a number attached that tells lenders how much of a default risk you are.

He goes into the details of default risk, interest rate risk, and inflation risk in his Part XII - Bonds.

Bonds, loans, credit lines and even cash - on - delivery (COD) purchases all assume a kind of default risk.

Think of default risk as more closely associated with the general conception of counterparty risk: noncompliance with the specifications and terms of a contract.

Now, there's a 20 + page proposal to place at least a portion of the default risk and responsibility back on to the lenders» shoulders.

The latter requirement flies in the face of the myth that the rating agencies have promulgated, namely, that their ratings mean the same thing, in terms of default risk, across products.

LMI individuals often have better utility bill payment records than credit scores, and utility bill payment is a better indicator of default risk in an on - bill financing program anyway (and default rates have been extremely low).

By taking big data to the financial institutions with Electric Ireland we hope to show that these people need less disposable income [to justify a mortgage] and are less of a default risk.»

MHI has followed up its comments by initiating an ongoing dialogue with the GSEs to address any concerns they have about chattel loans, providing expertise in the assessment of default risk, opportunities for risk sharing, operational issues and procedures for loss mitigation and foreclosure.

Treasury bonds are considered by most to be free of default risk, so they are the benchmark to which all other types of bonds are compared.

Efficient Pricing of Default Risk: Different approaches for a single goal by Damiano Brigo of Banca IMI, and Massimo Morini of the University of Milan Bicocca (99K PDF)-- 10 pages — 2005

While their OTC nature makes it easier to customize terms, the lack of a centralized clearinghouse also gives rise to a higher degree of default risk.

In general, corporate bond investors underestimate the costs of default risk.

Because US Treasuries are free of default risk, other bonds are compared to treasuries in order to get an idea of their credit risk.

«FHA bears essentially all of the default risk, so pricing of default risk is not a concern for wholesale lenders and mortgage brokers,» the study reads.

Different fixed income securities carry varying levels of default risk.

Securities such as gilts and U.S. Treasury bonds are free of default risk, but expectations of higher inflation and interest rate changes can both affect their value.

To mitigate the impact of default risk, lenders often charge rates of return that correspond the debtor's level of default risk.

Do Macroeconomic Variables Matter for the Pricing of Default Risk?

The precise problem is that no one trusts their own estimates of default risk, so they're afraid to lend.