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Support Does Matter In Credit

Government involvement in capital markets has been pervasive, even in industrial countries, for a long time; in the United States, for example, historically one observes frequent involvement in lending activities, through loan programs for students, for small businesses, for housing, for exports, and it is estimated that around 25% of all loans during 1980s originated from government agencies or carried government guarantees.

At S&P Capital IQ, we have developed two statistical overlays that aim to quantify the likelihood and impact of governmental and parental support on the creditworthiness of private and public, financial and non-financial firms, globally, thus expanding the scope to emerging and frontier markets. Such overlays can be used in conjunction with S&P Capital IQ credit risk models, enhancing the credit risk assessment by risk managers and analysts.

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Support Does Matter in Credt: Government-Related-Entities and Parental Support Overlay