Reference credit

Earlier, in 1801 in Mexico, Andres Manuel del Rio, a chemist and mineralogist, discovered an unusual substance he called erythronium, but he was told it was similar to chromium. Only later was it found to be vanadium. Some early references credit Del Rio with vanadiums discovery, but the most recent references list Sefstrom as the discoverer. 

Forward credit spreads are based on the risky forward rate less the riskfree forward rate. The forward credit spread can be estimated as the difference between the forward yield for a benchmark bond and the yield on the reference credit asset. 

Credit spread options are options whose payout is linked to the credit spread of the reference credit. This product can be used to manage the credit risk on corporate bond and corporate bond option positions. It isolates credit spread risk, which is an important factor in the underling... 

A variety of credit-linked structures may be created to suit the various risk/reward profiles of investors. For example, some CLNs may protect the principal amount and credit events may only affect the interest cash flow from the CLN whereas others may link the redemption of principal to the performance of reference credit instruments. 

Uncertainty of the recovery rate based on current conditions specific to the reference credit. 

The pricing of credit default swaps is determined in the credit default swap market by traders who determine the credit default swap spread through their assessment of the default risk of the reference obligations. This spread information can give valuable information about the key pricing components of the reference credit implied probability of default of the reference credit and recovery assumptions. These price... 

If the time of default for a reference credit is l, then let us denote the cumulative (risk neutral) default probabilities for the reference credit as... 

Recovery rates on bonds vary by the position in the reference entity s capital structure and the level of security offered to the bond holders. Determining the appropriate recovery rate is not a trivial process and requires careful analysis into the traded prices of deliverable obligations for the reference credit. In practice there is limited historical information on the recovery rates experienced for credit default swaps. 

The probability of survival for a credit may be viewed as a decreasing function against time. The survival probabilities for each traded reference credit can be derived from it s credit curve. The survival probability is a decreasing function because it reflects the fact that the probability of survival for a credit reduces over time. For example, the probability of survival to year 3 is higher than the probability of survival to year 5. 

The values of the terms in Equation 1 depend on the characteristics of the route, traffic and vehicle, and can be adapted to each specific transport case. Reference values are available in the hterature (Uijt de Haag Ale 1999, Cozzani et al. 2004). Table 1 reports some of the reference credit factor values considered in the current analysis. 

From the CDS premium values we can construct a term structure of credit rates for this particular reference credit (or reference sector), which is shown at Figure 10.18. We can also construct a term structure of default probabilities, and this shown at FIGURE 10.19. 

The iTraxx series is a basket of reference credits that is reviewed on a regular basis. For example, the iTraxx Europe index consists of 125 corporate reference names, so that each name represents 0.8 percent of the basket. FIGURE 10.20 shows an extract from a Bloomberg screen for the June 2011 iTraxx Europe index, with the first page of reference names. FIGURE 10.21 shows additional terms for this index contract. ... 

The index tranche market trades in both a standardized format and in a bespoke format. Bespoke format means that investors can customize their investment by selecting the portfolio constituents (select reference credits, number of credits, sector diversification, etc.), the attachment and detachment points, currency, maturity, and target rating. 

The earhest written references to the use of oils as paint media date from the twelfth century. The van Eycks, who traditionally have been credited as the inventors of oil painting, improved the technique to such a degree that oil quickly replaced egg tempera as the prevalent medium. 

The principle of double entry dates from the fifteenth century and is based on the premise that eveiy transaction involves a giver and a receiver of value. Double entiy requires that each transaction be entered into two accounts, the convention being that the account of the giver is credited and the account of the receiver is debited with the same amount of money, as noted in the journal. For convenience, each account is divided centrally, and the debit items are entered on the right-hand side. It is also usual to provide a cross-reference to the journ entiy so that errors and omissions can be checked. 

Credit references could be very informative when evaluating a prospective employee. 

In 1954 this reaction was more extensively investigated by Buchi,. Inman, and Lipinsky,(81) who confirmed the oxetane structure of the photoproduct. To credit their initial work on this interesting reaction, it commonly is referred to as the Paterno-Buchi reaction. 

The damage radius is first estimated using a correlation published in the complete Dow index. This correlation is based on the previously determined F EI. The dollar value of the equipment within this radius is determined. Next, a damage factor (based on a correlation provided) is applied to the fraction of the equipment actually damaged by the explosion or fire. Finally, a credit factor is applied based on safety systems. The final number, in dollars, is the MPPD value. This number is used to estimate the MPDO using a correlation. Details on the procedure are available in the complete Dow reference. 

Suppose you are asked to evaluate the purchase of the multicone cyclone referred to in Example 3.4. The capital investment is 35,000 (see Example 3.4), and the equipment has a class life of 5 years, after which it will be sold for the salvage value of 4000. The income stream generated by the machine is on line A in Tables EB.5A and EB.5B. As the equipment ages, its operating and maintenance costs increase, and line B lists the expense profile. Assume a tax rate of 35 percent with no investment tax credit. Evaluate two possible scenarios (a) 100 percent use of equity and (b) 100 percent debt financing. Use straight-line depreciation for debt financing, for simplicity assume equal annual payments (principal plus interest) to the lender for the 5 years at a rate of 10.5%. 

Almost all of the documents which are listed in the References and Abstracts section are available in full text form, as photocopies or pdf files from Rapra Technology Ltd s Document Delivery Service. Documents can be delivered by a variety of methods, including email, post or fax. Customers may pay for individual copies at the time of ordering by credit card or alternatively open up a deposit account. See the back of this report for further information. 

---