Information Value

Adjusted Default Spread 1.74%

Equity Risk Premium 6.94%

Country Risk Premium 2.34%

Corporate Tax Rate 20.00%

Moody's Rating Baa1

Sovereign CDS Spread 0.65%

Adjustments Formula
𝑃𝐷𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑=𝑃𝐷𝑏𝑎𝑠𝑒+𝐶𝑜𝑢𝑛𝑡𝑟𝑦𝑅𝑖𝑠𝑘𝑃𝑟𝑒𝑚𝑖𝑢𝑚+𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑𝐷𝑒𝑓𝑎𝑢𝑙𝑡𝑆𝑝
Adjusted PD 𝑟𝑒𝑎𝑑+𝑀𝑜𝑜𝑑𝑦′𝑠_𝑅𝑎𝑡𝑖𝑛𝑔_𝑉𝑎𝑙𝑢𝑒PDadjusted​=PDbase​
+CountryRiskPremium+AdjustedDefaultSpread+Moody′s_Rating_Value

Adjusted LGD Same as base LGD

Components Formula

Probability of Default (PD) 𝑃𝐷𝑏𝑎𝑠𝑒=𝑃𝑂𝐷=0.010987PDbase=POD=0.010987​

Loss Given Default (LGD) 𝐿𝐺𝐷=50%=0.50LGD=50%=0.50

Exposure at Default (EAD) 𝐸𝐴𝐷=$1,014,918EAD=$1,014,918

Expected Credit Loss (ECL) 𝐸𝐶𝐿=𝑃𝐷𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑×𝐿𝐺𝐷×𝐸𝐴𝐷ECL=PDadjusted​×LGD×EAD

 Explanation
Additional premium reflecting the creditworthiness of Boutique
Corporation Public Company Limited.
Additional return required by investors for holding equity investments
compared to risk-free investments.
Reflects the overall risk level of the country in which Boutique
Corporation Public Company Limited operates.
Affects the company's financial performance and, indirectly, its credit
risk.
Provides a benchmark for assessing creditworthiness, which we use to
adjust the Probability of Default (PD).
Indicates the credit risk of the country's government, indirectly affecting
the credit risk of the company.
Value

3.05%

50%
Value

0.010987

50%

$1,014,918

$15,504.41
 Explanation

Adjusts the Probability of Default (PD) based on additional risk premiums

and the Moody's rating of Baa1.

Assumes the Loss Given Default (LGD) remains constant at 50%.

Explanation
Base Probability of Default (PD) remains the same as provided (POD =
1.0987%).
Assumes a constant Loss Given Default (LGD) of 50%.

The Exposure at Default (EAD) remains the same as provided ($1,014,918).

Calculates the Expected Credit Loss (ECL) based on the adjusted PD, base
LGD, and the provided Exposure at Default (EAD).
PD adjusted
​
=0.010987+0.0234+0.0174+3=3.051387%
 Calculation of Adjusted PD Formula Value
𝑃𝐷𝑏𝑎𝑠𝑒=𝑃𝑂𝐷=0.010987PDbase
Base PD (POD) 0.010987
​

=POD=0.010987
𝐶𝑜𝑢𝑛𝑡𝑟𝑦𝑅𝑖𝑠𝑘𝑃𝑟𝑒𝑚𝑖𝑢𝑚=2.34%CountryRisk
Country Risk Premium 2.34%
Premium=2.34%
𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑𝐷𝑒𝑓𝑎𝑢𝑙𝑡𝑆𝑝𝑟𝑒𝑎𝑑=1.74%AdjustedD
Adjusted Default Spread 1.74%
efaultSpread=1.74%
𝑀𝑜𝑜𝑑𝑦′𝑠_𝑅𝑎𝑡𝑖𝑛𝑔_𝑉𝑎𝑙𝑢𝑒=3Moody
Moody's Rating Value 3
′s_Rating_Value=3

𝑃𝐷𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑=𝑃𝐷𝑏𝑎𝑠𝑒+𝐶𝑜𝑢𝑛𝑡𝑟𝑦𝑅𝑖𝑠𝑘𝑃𝑟𝑒
𝑚𝑖𝑢𝑚+𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑𝐷𝑒𝑓𝑎𝑢𝑙𝑡𝑆𝑝𝑟𝑒𝑎𝑑+𝑀𝑜𝑜𝑑𝑦
Adjusted PD ′𝑠_𝑅𝑎𝑡𝑖𝑛𝑔_𝑉𝑎𝑙𝑢𝑒PDadjusted=PDbase
​ ​
3.05%
+CountryRiskPremium+AdjustedDefaultSpread
+Moody′s_Rating_Value
 Explanation
Base Probability of Default (PD) remains the same as
provided.

Reflects the overall risk level of the country in which the

company operates.

Additional premium reflecting the creditworthiness of

Boutique Corporation Public Company Limited.

Converted Baa1 rating to a numerical value according to

Moody's scale.

Adjusts the Probability of Default (PD) based on additional

risk premiums and the Moody's rating of Baa1.