Tuesday, February 14, 2017

Risky Business

Investment risk does not center on how likely a tenant is to default within 12 to 18 months, which is the general time frame of a corporate credit rating. The concern is how likely the lease contract is to perform over its entire life, which may be 10 years or longer. This article discusses how such an evaluation must look at the cumulative multi-year default risk, as well as the credit migration risk.