Oct 16: PROF EDWARD ALTMAN discusses the US recession

Edward Altman, the Max Heine Professor of Finance at NYU's Stern School of Business, says the bond markets are pricing in a severe recession. So far, corporate bond defaults have remained low, but they are likely to soar in the next year. Currently, US corporate defaults are running at just over two per cent year-to-date, whereas the markets are pricing in a default rate of around 11 per cent. A combination of tighter markets for credit and the pressures of the real economy will push default rates higher.