The last decade has seen the emergence of a variety of new tools and techniques being developed for decision support. There is no dearth of literature on the application of AI tools on decision areas like loan applications, bankruptcy of firms, and risk forecasting.
Bonds remain one of the primary source of external funding for American corporations.
In the past few years there has been a lot of research on this topic, especially in the realms of bond rating, quantification of risk in bond markets and the role of bond rating agencies in the bond market. We define default as a company missing either an interest or principal payment on an outstanding debt issue. One of the reasons for focusing on the high-yield bond domain is the speculative nature of such bonds. An investor in this category would find it immensely useful to have a model which can help him anticipate defaults. Such a model would help them protect their investment before the bonds go into default.