CECL & Term Probability of Default

FASB’s new accounting standard, ASU No. 2016-13, commonly referred to as “CECL,” will require banks to calculate continual, life-of-loan estimated credit losses on entire commercial & industrial (C&I) portfolios. Although mandatory adoption begins at the end of 2019, this unprecedented change from the longstanding incurred loss model will result in significantly more loan data-collection and analysis than ever before; banks need to begin to develop or enhance models and infrastructure immediately. Rapid Ratings has developed a series of Term Probabilities of Default (PDs), a key requirement for many banks in estimating forward-looking losses. Our Term PDs run 12 months to 10 years on public and private non-financial companies.

Download this whitepaper to understand how you can:

  • Avoid compiling and parsing large-scale statistics on which to base PD assessments
  • Inform methods for underwriting and pricing loans & organizing loan pools
  • Meet the CECL equivalent challenge in IFRS 9 -- Stage 2 accounting
  • Initiate PD x LGD as the preferred C&I model
  • Provide an authoritative second opinion on legacy or newly implemented internal or third-party systems
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