Before revision:  We obtain a complete solution to the post-default optimization subproblem, and prove a verification theorem for the solution of the pre-default optimization subproblem .
After revision:  We obtain a complete solution to the post-default optimization subproblem, and prove a verification theorem for the solution of the corresponding HJB equation. We provide a detailed numerical analysis showing that the investor increases his stock holdings as the filter probability of being in the high growth regime increases, and decreases his credit risk exposure when the filter probability of being in the high default risk regime gets larger. We find that the investor increases the fraction of overall wealth invested in the risky asset when the information gain coming from receiving price observations is higher .