Credit Transition Model

Predict Default Probabilities and Rating Transitions

It's well understood that economic cycles can impact rating performance over time. The challenge is understanding how to adjust ratings transition and default rate forecasts to reflect potential future economic conditions.


Moody's Analytics Credit Transition Model (CTM) allows clients to easily incorporate a variety of economic assumptions into rating transition and default rate forecasts, facilitating both stress testing and the communication of results to senior management. The model is informed by Moody's vast history of ratings information, which allows CTM to look at historical ratings transition patterns (including momentum) and project them forward based on economic assumptions to create sophisticated, accurate forecasts.

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