Default risk (or insolvency) is the uncertainty surrounding a company’s ability to service its debt as and when it falls due. Prior to default, there is no way to discriminate unambiguously between companies that will default and those that will not. At best, we can only make probabilistic assessments of the likelihood of default. By applying a turnaround practitioner’s lens, KPMG provide key insights to inform clients of sector default risk.
The fourth edition of KPMG’s bi-annual Distance to default publication focuses on the changing state of corporate health across all ASX sectors for the 6 months to June 2018.
In this report we dive into the largest movers by industry sectors, and analyse the proportion of companies consistently displaying low Distance to Default (D2D) scores (otherwise known as ‘D2D Zombies’). We also provide analysis and commentary on the potential opportunities and headwinds in the Australian construction sector.
We hope you find this fourth edition of KPMG Restructuring Services’ Distance to default publication useful in providing meaningful trends in corporate health across the ASX.