Article ID Journal Published Year Pages File Type
1023994 Transportation Research Part E: Logistics and Transportation Review 2008 16 Pages PDF
Abstract

This paper uses a binary logit model to predict the probability of default for high yield bonds issued by shipping companies. Our results suggest that two liquidity ratios, the gearing ratio, the amount raised over total assets ratio, and an industry specific variable are the best estimates for predicting default at the time of issuance. In-and-out-of-sample tests further indicate the predictive ability and robustness of our model. The results are of interest to institutional and individual investors as they can identify which factors to look at when making investment decisions, and which issues have a high likelihood to default; shipowners can also benefit by identifying the factors they need to focus on, in order to offer an issue that does not have a high probability of default.

Related Topics
Social Sciences and Humanities Business, Management and Accounting Business and International Management
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