The hottest Credit Risk Substack posts right now

And their main takeaways
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Top Finance Topics

Fannie and Freddie: Single Family Serious Delinquency Rates Increased in December

CalculatedRisk Newsletter • 14 implied HN points • 04 Feb 25
💰 Finance Housing Market Real Estate Mortgages Economic Trends Credit Risk
  1. Single-family serious delinquency rates for Fannie Mae and Freddie Mac have increased slightly in December, indicating more homeowners are struggling to keep up with mortgage payments.
  2. Fannie Mae's delinquency rate rose to 0.56% while Freddie Mac's went up to 0.59%, both of which are still lower than pre-pandemic levels.
  3. Older loans from before 2009 show higher serious delinquency, whereas more recent loans are performing better, but there are still some lingering issues from past housing bubble years.

Default and Bankruptcy: Black, white and shades of grey

Musings on Markets • 0 implied HN points • 14 Jul 11
💰 Finance Debt Management Economic Policy Credit Risk Debt Management Financial risk Macroeconomics
  1. Default is not just about missing a payment; it can also involve lenders accepting losses to help borrowers avoid a formal default. This can include restructuring loans or adjusting payment terms.
  2. Lenders may prefer implicit default over explicit default because it allows them to avoid recognizing their mistakes in assessing credit risk. It makes the situation less transparent and allows them to delay acknowledging losses.
  3. For borrowers, sometimes it might be better to face explicit default and make necessary changes rather than stay in a cycle of implicit default, which can lead to worse problems down the line.

Bond Ratings: Why, how and what next?

Musings on Markets • 0 implied HN points • 14 Oct 09
💰 Finance Bond Markets Credit Risk Investment Analysis Regulatory issues Bond Markets Credit Risk Investment Analysis Market Regulation Financial Institutions
  1. Bond ratings help investors understand the credit risk of borrowing companies. Ratings agencies provide this information because individual investors often lack the knowledge to assess it themselves.
  2. Bond rating changes can affect market prices, but often prices react before the rating changes happen. This shows that while ratings are useful, they can be slow to reflect current risks.
  3. Though there are concerns about conflict of interest because ratings agencies are paid by the companies they rate, it's important to recognize that many factors contribute to bond performance, not just these ratings.

Quant Letter: February 2025, Week-3

The Parlour • 0 implied HN points • 19 Feb 25
💰 Finance Investing Credit Risk Quantitative Analysis Market Trends Data science
  1. Using data from US corporate bond holdings can help predict credit risk better than traditional ratings. It means more real-time information for making investment decisions.
  2. A new investment strategy called Betting Against Bad Beta is introduced. This strategy aims to improve how investors can bet against stocks with poor performance.
  3. Machine learning is becoming more important in finance, especially for analysis and predicting risks. This technology helps make smarter investment choices.