Bankruptcy Guru Visits the Department of Accounting at UCT

Carlos Correia, Ryan van Breda, Professor Michael Wormald and Glen Holman from the Department of Accounting with Professor Edward Altman.

Professor Edward Altman, one of the 100 most influential people in the world according to the publication Treasury and Risk Management, visited the Accounting department recently to share his insights into global credit markets.

Professor Altman, the Max L. Heine Professor of Finance at the Stern School of Business at New York University, presented a seminar titled “Current Conditions in Global Credit Markets – A Tale of Three Periods” to Accounting faculty and postgraduate students.

His presentation outlined the growth in the US high yield “junk” bond market from less than $10 billion in 1978 to about $1 trillion in 2007, linked with decreasing default rates and correspondingly decreasing yield spreads in the riskiest of debt classes. He noted that the yield-to-maturity spread went to as low 2.69% on June 5, 2007, the lowest spread in the history of the high-yield bond market.

Prof. Altman concluded that the benign credit environment that had been fuelled by significant liquidity from institutions would cease as non-traditional lenders move to other investments including riskless debt instruments. This move would impact negatively on the default and recovery rates inducing investors to demand increased returns on leveraged loans and distressed debt.

Prof. Altman has an international reputation as an expert on corporate bankruptcy, high yield bonds, distressed debt and credit risk analysis. He was named Laureate 1984 by the Hautes Etudes Commerciales Foundation in Paris for his accumulated works on corporate distress prediction models and procedures for firm financial rehabilitation and awarded the Graham & Dodd Scroll for 1985 by the Financial Analysts Federation for his work on Default Rates on High Yield Corporate Debt and was named "Profesor Honorario" by the University of Buenos Aires in 1996. He is currently an advisor to the Centrale dei Bilanci in Italy and to several foreign central banks. Prof. Altman is also the Chairman of the Academic Council of the Turnaround Management Association. He was inducted into the Fixed Income Analysts Society Hall of Fame in 2001 and elected President of the Financial Management Association the following year.

Prof. Altman's primary areas of research include bankruptcy analysis and prediction, credit and lending policies, risk management in banking, corporate finance and capital markets. He has been a consultant to several government agencies, major financial and accounting institutions and industrial companies and has lectured to executives in North America, South America, Europe, Australia, New Zealand, Asia and Africa. He has testified before the U.S. Congress, the New York State Senate and several other government and regulatory organizations and is a Director and a member of the Advisory Board of a number of corporate, publishing, academic and financial institutions.

Posted on 28/08/2008 by Carolyn McGibbon