Bond default rates to get worse, says Altman

Dr Edward Altman has an international reputation as an expert on corporate bankruptcy, high yield bonds, distressed debt and credit risk analysis. His Z-score model for predicting bond default and recovery rates is widely used throughout the finance industry. Dr Altman has been a consultant to several government agencies, major financial and accounting institutions and industrial companies and has testified before the US Congress and the New York State Senate. In an interview with FinanceAsia, he explains the logic behind the Z-score model and how recent events have made it more popular as a predictive tool.

Briefly explain the idea and logic behind your Z-Score bankruptcy-prediction model.
The Z-score is a fundamental financial...