Recovery Rates are one of the free informational services you will find on Enron Credit. Recovery is the proportion of the debt you are owed that you are able to recover following a bankruptcy. You can also use recovery rates to determine how much of your credit exposure should be protected.

The formula we use to determine recovery rates is as follows:

Recovery Rate = Value recovered / Value of debt

Of course, recovery rates are affected by several other factors including industry type, economic conditions, seniority of the debt, and value of collateral.
 

Note: If you are a trader doing business with Enron Credit and want to use a different recovery assumption, this can certainly be factored into any hedging transaction.

For a more detailed discussion of recovery rates and related topics, please see "Introduction to Credit Risk" under the Learn More section.