Recovery rates

Recovery rates refer to the percentage of a debt or investment that a lender or investor recovers when a borrower defaults or an asset is liquidated. It measures how much value is recovered relative to the original amount owed or invested. A higher recovery rate indicates that most of the invested or lent amount is recovered, minimizing losses. Conversely, a low recovery rate suggests significant losses. Recovery rates are important for assessing risk and the potential financial impact when borrowers or investments do not perform as expected.