Heckyl Credit Risk Early Warning System
Corporate default or bankruptcy do not happen overnight. There is a sequence of events such as layoffs, legal/ regulatory issues and management change leading to default or bankruptcy.
In our view, unstructured data sets such as news is an important piece of information that can detect such a sequence of events prior to default.
Our hypothesis is that deep-dive analytics on news data can capture the pre-default behavior of corporates. At the same time, it can also help banks to identify distress corporate borrowers ahead of time.
To test our hypothesis, we analyzed news data for 12 US-based oil and gas exploration & production companies which went bankrupt in the past 2-years.
Here, we present one such case of SandRidge Energy Inc which filed for bankruptcy protection in May 2016. Read the rest of this entry »
Heckyl Credit Risk Early Warning System has identified 50+ companies with a long working capital cycle based on analysis of 1,012 companies’ balance sheet for FY16 and FY17. The longer working capital cycle puts pressure on company’s cash flows and may result in higher short term debt. Hence, long working capital cycle is a red-flag for lenders.
Heckyl system captures company related red-flags based on a variety of business rules. Financial data is one of the important data points in the assessment of credit risk. Heckyl EWS consists of thousands of business rules that analyze the financial data.