Fundamental credit · CDS basis · Distressed situationsCorporate credit analysis requires different signals than equity analysis. We focus on language related to debt covenants, liquidity facilities, interest coverage, and refinancing risk. When a company's communications shift from standard covenant descriptions to detailed discussions of waiver negotiations or amendment processes, our systems flag elevated credit risk before the rating agencies downgrade.
We identify credits where data analysis indicates improving creditworthiness not yet reflected in spreads. This includes companies where risk language is simplifying, where management discussion emphasises deleveraging, and where structured financial data confirms improving coverage ratios. These rising-quality signals offer analytically compelling divergence from current market pricing.
On the other side, we target credits where data signals indicate fundamental deterioration. Increasing reporting frequency, expanding risk profiles, and changes in auditor language or going-concern references all precede credit events. For distressed situations, our systems analyse all available data to estimate recovery rates and identify mispriced claims.