On Numerical Modeling of Corporate Strategic Debt Service

The point(s) which divide the state variables space into different phases and give rise to different debt service flows based on game theory can be determined either analytically for perpetual debt, or numerically for debt of finite maturity. The fact that debt service flow can vary through its life span and that such a change can be modeled is of importance to credit risk management. Numerical implementation of the strategic debt service theory poses many challenging aspects. The aim of this thesis is to explore feasible options that can be implemented in dealing with such challenges.