CASE STUDY — 17 Aug, 2021
An Asian-based Technology Company Effectively Evaluates Chinese Government Entities
Highlights
THE CLIENT: A large technology company headquartered in Asia
USERS: The credit risk management team
Nearly 40% of organizations responding to a 2021 survey by S&P Global Market Intelligence ("Market Intelligence") reported increased usage of public cloud − an IT model where computing services and infrastructure are managed by a third-party provider. According to the survey, this was a trend prior to the onslaught of COVID-19, but the pandemic acted as a catalyst that forced many organizations to pivot toward digital business models more rapidly. The Chinese public sector is no exception, and has been adopting cloud computing rapidly as a way to implement various e-government initiatives.
The credit risk management team at this large Asia-based technology company had established an internal credit risk rating system for most of its customers. Over the past several years, local and regional governments (LRGs) in China became important users of the company's cloud services, creating a need to evaluate the creditworthiness of this customer segment, as well.
Pain Points
The credit risk management team did not have access to good fundamental data for Chinses LRGs, nor a sound methodology for assessing potential risks. They wanted to identify a third-party provider that understood the Chinese market and could deliver:
- High-quality budget data for LRGs.
- Insights into local government financing vehicles (LGFVs).
- A quantitative model to generate credit scores[2] to understand possible vulnerabilities with customers and the possibility of default.
- Financial information presented in USD currency, as well as CNY.
- A powerful, yet easy-to-use, desktop platform for data retrieval, display and analysis for both Chinese- and English-speaking users.
- High-touch support to assist the team as it evaluated this new part of the market.
This company had been a long-time client of Market Intelligence and reached out to discuss how the firm could assist.
The Solution
Market Intelligence specialists discussed the robust S&P Global China Credit Analytics platform that could meet all of the credit risk management team's needs – and more. This comprehensive one-stop solution for advanced credit insights on Chinese public and private companies, bond issuers, and government-related entities (GREs) would enable the team to:
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Review budget details for LRGs |
Fiscal and macroeconomic data is available for ~600 LRGs, with details on fiscal income, government fund income, government debt, and more. Unlike publicly available data, this offering has been standardized by S&P Global Ratings (China) analysts to support reliable comparisons. Users can also choose a specific region and view this LRG data. |
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Understand the financial strength of LGFVs |
Credit scores are available for over 2,000 issuers of LGFVs that are created by providing an overlay to the credit scores for LRGs. |
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Stay ahead of the curve with innovative sentiment analysis |
Sentiment analysis draws signals from news, media, blogs, and more to provide alerts of all events and hot words relevant for entities in a watch list. 165 exhaustive event labels shed light on risks, management, and governance for monitoring purposes. |
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Create additional credit scores |
Users can crete a holistic picture of creditworthiness by generating additional quantitative credit scores for GREs using CreditModelTM LGFVs. This unique capability for LGFVs adds a new level of detail to complement internal credit rating models. |
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Save time with productivity enhancing tools |
Strong functionality in the China Credit Analytics platform lets users retrieve and present data as efficiently as possible. Batch scoring capabilities save time, plus a credit risk dashboard helps visualize the credit profiles of a portfolio of entities. In addition, concise tear sheet summaries are automatically generated that provide an entity's profile, financial highlights, and credit score. |
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Access a dual language platform |
A dual language user interface supports both Chinese and English languages. In addition, financial information can be viewed in USD currency as well as CNY to reconcile information.
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Key Benefits
Members of the credit risk management team thought that the depth and breadth of data, quantitative models, and easy-to-use platform would enable them to efficiently assess and monitor this fast-growing part of the company's business to help protect the revenue stream. They subscribed to the China Credit Analytics platform and are now able to:
- Leverage differentiated content, localized analytics, and quantitative model-generated credit scores.
- Get granular and globally credible evaluations of credit risk that are locally relevant.
- Easily track the financial position of different LRGs in China and their budget details.
- Evaluate the creditworthiness of LGFVs and create an early warning system to detect potential weaknesses.
- Create addition credit scores for LGFVs, as needed.
- Rely on the support of a seasoned team of Market Intelligence specialists familiar with China and the China Credit Analytics platform to help navigate the market.
[1] "Voice of the Enterprise: Cloud, Hosting & Managed Services, Budgets & Outlook 2021".
[2] S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit model scores from the credit ratings issued by S&P Global Ratings.