Kamakura Corporation’s monthly index of troubled public companies increased again in February, rising 0.2% to 12.3% of the global public company universe.
This is the ninth rise in the troubled company index in the last 11 months. Current credit conditions are better than only 50.3% of the monthly periods since the start of the index in January, 1990. Credit conditions remain at their worst level since December 2003.
The all-time low in the index was 5.4%, a level reached in April and May, 2006. Kamakura defines a troubled company as a company whose default probability is in excess of 1%. The index covers more than 20,000 public companies in 29 countries using the fourth generation version of Kamakura’s advanced credit models.
“The market continues to teeter on the brink of a recession, with credit conditions barely better than the average for the last 18 years. In February, the percentage of the global corporate universe with default probabilities between 1% and 5% declined by 0.2% to 8.5%. The percentage of companies with default probabilities between 5% and 10% was up 0.1% to 1.9% of the universe in February. The percentage of the universe with default probabilities between 10 and 20% was up by 0.4% to 1.3% of the universe. The percentage of companies with default probabilities over 20% was up by 0.1% to 0.7% of the total universe in February,” says Warren Sherman, president and COO, Kamakura.