How to Mitigate Vendor Credit Risk to Customers With Claims Put Options

For credit professionals, the ability to mitigate customer credit risk is always critical. Debt markets have exploded in size and complexity in recent years as hedge funds, private equity firms, and collateralized loan obligations have exponentially increased corporate America’s comfort with leverage. Meanwhile, a new wave of leveraged buyout financings has produced higher levels of first mortgage debt and the emergence of second lien debt, leaving little for vendors after bankruptcy. Credit…