Thomson Reuters launches new forward-looking model to assess credit risk
(Thomson Reuters ONE) -
- Provides greater accuracy in predicting which companies are most/least likely
to default
New York, April 16, 2012 - Thomson Reuters, the world's leading supplier of
intelligent information for businesses and professionals, today announced that
it has introduced the StarMine SmartRatios Credit Risk Model to assess the
credit risk of publicly traded companies. The SmartRatios model is an intuitive
and robust default prediction model that provides a clearer view of a firm's
credit condition and financial health by analyzing a wide array of accounting
ratios that are predictive of credit risk and combining these with forward-
looking analyst estimates. This builds on Thomson Reuters aims to help
professional investment managers generate more profitable investment ideas and
mitigate risks, giving them an edge over their peers.
Unlike other credit risk models that use accounting ratio analysis, the
SmartRatios model incorporates information from forward-looking analyst
estimates via StarMine's proprietary SmartEstimate(®) rather than relying solely
on backward-looking reported financials. The forward-looking SmartEstimates
provide a considerable boost to the model's predictive power and responsiveness,
particularly during periods when economic conditions are changing rapidly.
Dr. George Bonne, director of quantitative research at Thomson Reuters, said:
"It's expected that one would want to use forward-looking information when
assessing the financial health of a company. The shocking reality is that there
is no other commercial credit risk model that does so in a systematic fashion.
They all rely on backward-looking reported financials. It's the traditional
driving by looking in the rear-view mirror problem again, and investment
managers cannot afford to be blind-sided by the failures of inefficient models.
One of the key advantages of our SmartRatios model is that it not only uses the
consensus forecast but also our industry leading SmartEstimate."
The SmartRatios model groups various accounting ratios into five components:
profitability, coverage, leverage, liquidity and growth, and provides 1-100
percentile scores on each component so that professionals can quickly understand
where a company's strengths and weaknesses lie. In addition to using the
StarMine SmartEstimate, the model also makes use of industry-specific metrics
for companies in the banking, insurance, utility, retail, airline and oil & gas
industries. The model has already found numerous valuable use cases among
financial professionals: as an equity alpha signal, for fixed income security
selection, for predicting changes in agency ratings, and for assessment of
counterparty or supplier credit risk.
The model produces daily updated estimates of the probability of default or
bankruptcy within one year for over 35,000 companies globally, including
financials. The default probabilities are also mapped to traditional letter
ratings and ranked to produce 1-100 percentile scores (with 100 being comparable
to an AAA rating). The StarMine SmartRatios model is provided as a daily data
feed from Thomson Reuters, as well as through a range of its desktops, such as
Thomson Reuters Eikon, Thomson ONE for Investment Management and the newly-
released Datastream Professional.
About StarMine and SmartEstimates(®)
Thomson Reuters provides equities and credit based alpha and risk factors for
investment managers as well as corporate investor relations teams. Thomson
Reuters has long been known for its enhanced sell-side forecasts; one example is
StarMine SmartEstimates, which predict the direction of earnings surprises with
a success rate of around 70% when the SmartEstimate significantly differs from
the consensus estimate. The StarMine SmartRatios model sits alongside the
StarMine Structural Credit Risk model, both form part of StarMine's credit risk
modelling offering.
About Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for
businesses and professionals. We combine industry expertise with innovative
technology to deliver critical information to leading decision makers in the
financial and risk, legal, tax and accounting, intellectual property and science
and media markets, powered by the world's most trusted news organization. With
headquarters in New York and major operations in London and Eagan, Minnesota,
Thomson Reuters employs approximately 60,000 people and operates in over 100
countries. Thomson Reuters shares are listed on the Toronto and New York Stock
Exchanges (symbol: TRI). For more information, go to http://thomsonreuters.com.
CONTACT
Lemuel Brewster
Thomson Reuters
+1 646-223-5147
Lemuel.brewster(at)thomsonreuters.com
Clare Arber
Thomson Reuters
+44 20 7542 6256
clare.arber(at)thomsonreuters.com
Press Release PDF:
http://hugin.info/142273/R/1602486/506364.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Thomson Reuters Corporation via Thomson Reuters ONE
[HUG#1602486]
Unternehmensinformation / Kurzprofil:
Datum: 16.04.2012 - 14:30 Uhr
Sprache: Deutsch
News-ID 135292
Anzahl Zeichen: 5993
contact information:
Kategorie:
Business News
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