Does Business Rescue count as default?

What does Business Rescue mean for credit risk, ratings and cross-default? Business Rescue precludes creditors from applying for liquidation of the business. This is the removal of an existing right of lenders: “a temporary moratorium on the rights of claimants against the company or in respect of property in its possession” From what I gather […]

ERP and how expensive is the US market now?

The US market is expensive. Less expensive than it was a few days ago before the yield curve inverted and the S&P500 had several days of large losses, but expensive still. But how expensive is it really? The Cyclically Adjusted Price Earnings (CAPE) or Shiller PE ratio is 28.5. Although this is down from January […]

Ghosts of bullets dodged

I have never owned Steinhoff shares. I was surprised then, when going through some old blog uploads (dealing with a separate copyright issue that I may touch on in another post) to find this share price graph of Steinhoff from 2007 I don’t remember looking at this, but the blog entry was actually about insider […]

ERP update – delayed response to a blog reader

I reader asked why so many practitioners use high Equity Risk Premiums in their valuations and fairness opinions. In particular, he mentioned a specific assumption set he had seen including: ERP of 6.8% company specific risk premium of 4% He also commented on how haphazard the use of risk premiums can be and referenced a […]

Why the last 7 years have felt rough

We’ve been in and out of recession. We’ve had more political drama than I’d like for a lifetime. We’ve had several lifetimes of obvious, unresolved corruption and fraud. We’ve had a volatile and depreciating currency by and large. This graph brought it home a little to me: Egypt, despite an Arab Spring has not experienced […]

What is Systemic Risk?

Systemic risk is risk to the “system” in some way. In the financial services world, it is often defined in one of two ways: The risk of contagion, where¬†failure of an entity leads to distress or failures of others [micro prudential] The risk of an event that can trigger serious consequences for the real economy. […]