An analyst has gathered the following information about ABC Inc. and DEF Inc. The respective credit ratings are AA and BBB with CDS spreads of 200 and 300 basis points each. The associated probabilities of default based on published reports are 10% and 20% respectively. 

What is the implied recovery rate (RR) of both firms?

 What is your take on the loss given the default of these firms?

Answer rating: 100% (QA)

We can use the relative probability of default the relative credit rating and the CDS spread to dete... View the full answer