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Future of Control | Risk Alignment: Intelligent Bond Default Warning
As part of our Risk Alignment theme under Future of Control, Deloitte Intelligent Bond is a product solution created by Deloitte China Risk Advisory team with decades of experience in credit risk consulting projects. This article briefly introduces Deloitte Intelligent Bond to help you understand the role and application of the product and how it can support organizations to embrace the Future of Control.
In the Chinese bond market, the market size is growing rapidly, bond defaults can occur frequently, and the potential for financial reporting fraud remains. This difficult market situation brings many new challenges to investment institutions in the field of credit risk analysis, in particular, external rating failure, insufficient data, difficulties to quantify risks, and financial reporting fraud.
About the Service
Deloitte Intelligent Bond blends traditional rating experience in combination with advanced artificial intelligence and big data technology. The purpose of the service is to help bond investors improve the foresight, timeliness and effectiveness of bond risk management, providing a real-time online services with core functions, such as bond issuer rating, real-time warning and public opinion monitoring.
The core functions of the product include quantitative rating of bond-issuing enterprises, local government credit analysis, real-time warning based on quantitative public opinion and bond price analysis, etc. These functions could help institutional investors to identify and respond to potential credit risks in advance.
- Bond Rating
Relying on the continuous data collection by Deloitte’s professional data team, the product combines expert experience with data-driven models and can help users to conduct in-depth analysis of financial and operational data of bond-issuing enterprises. Then, the service can establish an effective internal rating system for bond-issuing enterprises, and help users to make business decisions concerning admittance, authorization and pricing, based on the credit risk quantifying model.
- Bond Warning
Taking into account the financial, operational, industry and regional factors of the bond-issuing entities, the internal evaluation model of Deloitte Intelligent Bond is based on a comprehensive fundamental factor analysis of bond-issuing enterprises. The service further incorporates the bond-issuing enterprises' public opinion factors and bond pricing factors, and uses an event-driven model to analyze their impact on the credit status of bond-issuing enterprises. Then, a credit stress index is formulated to comprehensively portray the credit risk level of bond-issuing enterprises.
- Quasi-Government Bond
Deloitte Quasi-Government Bond service provides complete coverage of more than 3,000 local governments and more than 1,800 Quasi-Government Bond investment entities as well as the full volume of public bond issuing enterprises. The service specifically constructs quantitative models for local government credit analysis. The model results are comparable across ratings and regions. Characteristic indicators are generated to analyze the financing channels of Quasi-Government Bond investment companies and government accounts receivable. The service realizes the aggregation of different credit elements through multi-dimensional surfaces, utilizes experts’ qualitative analysis, and solves the difficulties of mass rating in the whole market.
In addition, Deloitte’s Intelligent Bond Real Estate Service will also be released shortly, so stay tuned!
Case Sharing
Deloitte Intelligent Bond clients currently cover domestic banks, securities, insurance and leading fund institutions.
For example one of the state-owned leading banks through the use of our products successfully disposed of its 80 million position in default bonds 182 days in advance, effectively avoiding corporate default.
Based on the service features and core competencies, Deloitte Intelligent Bond is universally applicable to all financial institutions with bond investment risk control needs, such as banks, securities companies, insurance companies, trust and investment companies and fund management companies.
For more information, please visit the Deloitte Intelligent Bond website at:
