1. S&P Global Overview and Intecompany Financiang Chalenges and Solutions - James West

S&P Global Overview and 

Intercompany Financing 

Challenges and Solutions 

James West 

EMEA Head of Market Development for Public Sector & Professional Services 

S&P Global Market Intelligence 

11th May 2018 

Permission to reprint or distribute any content from this presentation requires the prior 

written approval of S&P Global Market Intelligence. Not for distribution to the public. 

Copyright © 2018 by S&P Global Market Intelligence. All rights reserved.

Agenda 

• S&P Global – Company Overview 

• S&P Global – Product Overview 

• Technology and AI 

• Intercompany Financing Overview 

– Challenges 

– Desktop 

– Credit Analytics 

– Yield Curves 


written approval of S&P Global Market Intelligence. Not for distribution to the public. 2

Our divisions work together 

to give you a 360 degree view. 

Integrated offering of 

credit ratings, risk 

research and critical 

insights 

Leading-edge index 

methodologies and 

research 

perspectives 

Market-leading global 

pricing benchmarks 

and deep supply 

chain analysis 

The most relevant 

and high quality 

business and 

financial data 



Market Intelligence at a glance 

$1.68B division 230K+ active users 11,000+ employees 

San Francisco 

Chicago 

Denver 

Dallas 

Mexico City 

Toronto 

Halifax 

Boston 

New York 

Washington, D.C. 

Charlottesville 

Stockholm 

London 

Frankfurt 

Paris 

Milan 

Madrid 

Moscow 

Dubai 

Islamabad 

Ahmedabad 

Gurgaon 

Beijing 

Seoul 

Tokyo 

Shanghai 

Hong Kong 

Manila 

Singapore 

São Paulo 

Buenos Aires 

Johannesburg 

Perth 

Melbourne 

Sydney 



Our clients depend on our data, news, and 

analytics to make decisions with conviction. 

We serve a variety of clients across a range of sectors. 

Investment 

Management 

Investment 

Banking & 

Private Equity 

Banking & 

Insurance 

Corporates 

Professional 

Services & 

Public Institutions 



Our products are designed for how you work. 

Desktop 

Our web-based platform combines S&P Capital IQ broad 

company coverage, comprehensive financial data and 

research tools with SNL deep, sector-specific data to 

access company and asset-level information, exclusive 

news, proprietary research, regulatory insights, and more. 

Leveraging robust search and alert capabilities, powerful 

visual analytics, and user-specific profiles, clients gain a 

platform that is tailored to their workflows. 

From the Market Intelligence platform, users have oneclick 

access to Leveraged Commentary & Data (LCD) 

loan content and extensive reports to monitor markets 

and companies. Engage in deep credit analysis with 

RatingsDirect® for S&P Global Ratings and Research 

and Credit Analytics for views on public and private 

company credit risk. 

Office 

Create templates, download data, and update reports 

in real-time with robust add-ins for Microsoft Excel, 

Word, and PowerPoint. 

Mobile 

Hold the power of the S&P Global Market 

Intelligence universe in your hands with mobile 

access, anywhere, anytime. 

Feeds 

Gain fast access to our wide range of financial 

data sets with our API and Xpressfeed, our 

powerful data feed management solution. 



6

Technology: 

AI & Machine Learning

Technology and AI At S&P Global 

• Machine Learning (ML) and Advanced Analytics 

– Large volumes of unstructured but potentially useful data pose problems for many organizations 

– Algorithms than can identify structured data 

– Algorithm Training 

– Voice Technology and Data Scraping 

• Robotic Process Automation (RPA) 

– Software Automation to process routine tasks – data extraction and cleaning 

– Deployed more than 90 such automation bots in the last year 

– Bots have processed over 100 FTE of work; over 100,000 filings for debt capital structuring team 

– Improved speed and accuract 

• Natural Language Generation (NLG) 

– Acquisition of Kensho, data analytics and machine intelligence specialist 

– Software engine helps machines communicate with humans 

– Translates machine-generated data into prose 

– We integrate both NLG and RPA to publish news stories – 5,800 earnings stories in 5 days 

– Develop natural language search technology 



Intercompany 

Financing

Intercompany Financing – Challenges 

• Pricing Inter-Company Loans / 

Determining Arms Length Prices 

– Assess credit risk of subsidiaries and link to 

market observable pricing, with full 

documentation. 

– This is very important to clear regulatory 

requirements and to avoid costly penalties 

• Common Tax Authority Demands 

– Parental/Government overlay 

– Macro Economic Stress Testing 

– Built in publishing function 

– Country & Background Economic information 

• BEPS (Base Erosion & Profit Shifting) 

– Transparency 

• Fair Pricing for different markets 

• Corporate Yield Curves Methodology 

• Corporate Yield Curve Transparency 

• Credit Analytics 

• Company & Reference data 

• Company Structure 

• Berry Ratios 

• Support Pricing Decisions to Clear 

Regulatory Scrutiny & Audits 

– Accurate comparable analysis for companies & 

debt instruments 

– Assess credit worthiness of subsidiaries & 

affiliates 



Market Intelligence

S&P Capital IQ Platform 

Company Intelligence 

• Perform deep company and industry research 

– Financials from 88,000 public companies and over 4.4m profiled private companies 

– Company fundamental data – equities, fixed income capital structure, credit ratings 

– Extensive pricing and market data across all major quoted markets 

– Comparable analysis 

– Credit Health Panel 

– Extensive collection of broker and independent research reports 

– Analyst sentiment – S&P Capital IQ’s consensus and detailed estimates as well as industry-specific 

estimates 

• Monitor companies and markets 

– Access streaming quotes to a coverage universe or watch list 

– Market snapshots for indices mutual funds, futures, options, currencies & commodities 

– Events and transcripts, analyst estimates and updated financial performance 

• Screening Tool 

– Quickly search data points to add criteria 

– More than 5,000 financial and 3,000 qualitative data points available for screening 

– Include even more items with custom Formula builder 

– Screen for comparable companies and financials 



12

RatingsDirect 

Aggregated Intelligence 

• 20+ years of Ratings history spanning 83,000+ securities across the globe 

• Global, National and regional scale credit ratings on issuer and issue level 

• Review industry snapshots and compare key fundamental credit metrics 

• Assess medians, credit ratings migrations and outlook distributions by sector and 

other important trends 

Credit-adjusted financials 

• Access analyst adjusted financial statements for 600+ global banks and 2,800+ 

corporates and utilities 

• Robust comparison tools, customized filters and financial data reports 

• Aggregated benchmarks at sector, sub-sector, industry and company peer level 



13

Compustat 

Unmatched Company History and Depth 

• 30,339 Active and Inactive companies 

• Annual Data – History back to 1979 

– Historical Annual Data back to 1950 

• Quarterly Data – History back to 1979 

– Historical Quarterly Data back to 1962 

• Daily Market Data back to 1984 

• Monthly Market Data back to 1962; Annual 

back to 1950 

Over 10,000 items available 



14

Compustat – Breadth & Depth 

• Income Statement, Balance Sheet and Cash Flow 

Over 

10,000 

items 

• Industry Specific, Segment, Pension and Post-retirement data 

• Option, Auditor, Internal Control data 

• Quarterly Earnings Report Date, Actual Period End Date, Preliminary and Final 

update dates 

• Filing Date and Timestamp of filings 

• Recent FASB rulings covering Stock based Compensation, Non-controlling 

Interest, Pension and Fair Value 

• Entity Marker, Industry Classifications (GICS, SIC, NAICS) 

• Acquisition items 

• Market data – issue level data for price, dividend, shares, shares trading 

• Economic data 



15

Compustat – Transparency Capabilities 

Transparency Data 

• Company Level Notes 

– Annual and Quarterly Period descriptor notes which have an impact to the company as a 

whole from the management discussion and notes to the financial statement. 

– Concentrate on activities that drive company financials: Acquisitions, Discontinued 

Operations, Accounting Changes and other activities impacting the company 

• Item Level Notes 

– S&P Financial Analyst detailed notes about the standardization of the Compustat data 

item 

• Item Transparency Notes and Values 

– Actual values from the source (10K/10Q) used to adjust the Compustat data item 

– As Reported and existing mnemonics labels to tie back to the reported numbers in the 

company report 

– Focus on high impact items such as Special Items and commonly aggregated values 



16

Credit Analytics

Primary 

Measure 

Coverage 

Product 

Design 

DNA 

Inputs 

Credit Landscape: The Complete Offering 

Informed Judgment-Based Quantitative Fundamentals-Based Quantitative Market Signal-Based 

Public 

Ratings 

Scoring Template – 

Fundamental 

Scoring Model – 

Fundamental 

Probability of 

Default – 

Fundamental 

Peer 

Analysis Model 

Market Signals 

CDS spreads 


Stock Price 

S&P Global 

Ratings 

Scorecards 

CreditModel 

PD Model 

Fundamentals 

Credit Health Panel 

Market Derived 

Signals (MDS)* 

PD Model 


• Credit ratings* • Credit Score - 

Mapped to “bucketed” 

PD percentage 

• Credit Score - 

Mapped to “bucketed” 

PD percentage 

• Continuous PD 

percentage - 

Mapped to credit 

score 

• Relative score 

• Custom score 

• Credit Score - 

Mapped to PD 

percentage 

• PD percentage - 

Mapped to credit 

score 

• Analyst, committee 

driven & credit 

methodology driven 

• Segment-focus expert 

judgment modeling 

• Calibrated on ratings 

• Segment-focus 

quantitative modeling 

• Calibrated on ratings 

• Segment-focus 

quantitative modeling 

• Calibrated on 

empirical defaults 

• Fundamental-based 

scores and ratios for 

peer group 

assessment 

• Market derived 

signals based on 

credit default swaps 



• Market derived 

signals based on 

stock price volatility & 

returns 



• Medium/Long-term • Medium/Long-term • Medium/Long-term • Medium-term • Medium-term • Short-term 

(Point-in-time) 

• Short-term 

• (Point-in-time) 

• Global Coverage 

• Daily monitored 

• 6k companies 


• Scores available on 

demand 

• Industry-specific 

• Generic 


• Weekly pre-scored 

• 56k+ companies 

• Corporates, Banks, 

Insurers 


• Weekly pre-scored 


• Corporates, Banks, 

Real Estate (RE) 


• Daily pre-scored 

• 210k companies 

• Corporates 

• Rated Companies w/ 

CDS coverage 


• >1k companies 

• Listed Companies 



• Corporates, Banks, IB, 

Insurers, RE 

• Rigorous analysis of 

any relevant 

qualitative and 

quantitative inputs 

• Qualitative and 

quantitative inputs 

• Country risk 

• Industry risk 

• Economic risk 

• Sovereign risk 

• Financial statements 

+ quantifiable inputs 





• Financial statements 

+ quantifiable inputs 





• Financial Statements 

• Operational 

• Solvency 

• Liquidity 

• CDS spreads 




• Equity, Financials 





Fundamentals (Financials) 

*From S&P Global Ratings. S&P Global Market Intelligence, as well as its products and services are analytically and editorially separate and independent from other analytical areas at S&P Global Ratings. 

Market Factors 



Corporate Yield 

Curves

Market Challenge 

• Regulations to put pressure on firms to provide more transparency around liquid vs Illiquid bond 

holdings and the associated Value, Costs and Capital required to participate in the OTC bond markets 

• Changes in the market structure have resulted in reduction of sell side price making on inventory and 

impacted the quality and quantity of price data. Quotes and prices from the buy-side market have now 

become more important for Valuation, Benchmarking and Research 

Identified Market Challenges 

S&P Capital IQ Initial Solution 

Data 

Availability 

• Coverage across sectors and ratings limited 

(no sub-investment grade) 

• Incomplete term structures ( >10Yrs) 

• Full transparent, global set of Corporate 

Benchmark Curves 

• Interest Rate Curves – Swap, Government and 

Risk Free 

Data 

Quality 

• Uncertainty over quality of price data for 

curve construction 

• Stale price data 

• Indicative quotes parsed from Credit 

Trading Desks 

• Data filtering and cleansing to eliminate stale data 

• Liquid daily quotes ensure validity of daily curves 

Transparency 

• Inability to view underlying pricing data, bonds 

and spreads 

• Black Box calculations 

• Lack of support to query values received 

• Transparency provides access to underlying 

prices and spreads used in the curve construction 

• Fully transparent detailed methodology document 

• Access to SME’s 



20

What Has S&P Global Market Intelligence 

Created? 

7 Rating Bands 

AAA – CCC 

4 Currencies 

US$ € £, A$ 

11 GICS ® 

Sectors* 

Sectors 

• Consumer Discretionary 

• Consumer Staples 

• Energy 

• Financials 

• Healthcare 

• Industrials 

• Information Technology 

• Materials 

• Telecommunication 

Services 

• Utilities 

• Real Estate 

Indicative 

Quotes 

+5 Years 

History 

Transparent 

Inputs 

*An all Corporate Sectors, Financials and Non-Financials curve is also available in $, €, £ and A$. 



21

Curve Construction Methodology 

Modular Curve Construction And Transparent Calibration 

• Calibration based on indicative pricing of credits actively quoted by bond traders 

– Each curve represents the best fit for a group of credits specified by the sector and rating 

– Each curve captures the typical maturity basis observed at a given level of credit quality 

• The systems of curves is analytical and arbitrage-free by design 

• List of indicative input prices and spreads’ dispersion is provided for each curve 

*S&P Global Ratings Credit Ratings. 



22

Pricing an 

Intercompany Loan

Our differentiated data and analytics offers 

unique insights for the companies you cover. 

S&P Capital IQ 

Comprehensive financials, corporate 

hierarchies, ownership, news and 

transcripts for global public and private 

companies. 

Yield Curves 

Drill down & view underlying bond 

constituents and prices used in the 

construction of each curve to support 

reporting requirements 

Compustat ® Data 

Easily compare companies with 

standardized, historical data with 

annual/interim data back to 1979. 

Leverage same data set used by IRS 

for their audits 

Global Financials 

Fully transparent and auditable 

public and private company data, 

validated and standardized. 

Credit Analytics 

Utilize credit risk models to objectively 

assess credit risk of global 

subsidiaries to meet regulatory 

requirements 

Estimate both standalone credit 

scores and scores incorporating 

parental support. 



24

Pricing an Intercompany Loan – Company Data 

• Comprehensive public company 

financials 

• Global private company 

financials 

• Traceable back to source 

documents 

• In depth historical data 

• Ability to store proprietary 

financials for in-house analysis 

Source – S&P Capital IQ 7/2/18 

For Illustrative Purposes Only 



Pricing an Intercompany Loan – Credit Analysis 

• Quantitatively assess credit risk of subsidiaries 

• Quickly account for parental support 

• Benchmark vs. pubic and private peers 

• Supporting transparency information for assessment to increase defensibility 

• Securely save historical analysis for centralized reporting 


For Illustrative Purposes Only. 



Pricing an Intercompany Loan – Corporate Yield 

Curves 

• Full Term Structure 

• AAA-CCC Ratings 

• 1mo-30yrs 

• Z-spread overlay 

• Link from credit scoring to 

pricing 

• Assist with Arm’s Length 

Pricing 

• Transparency for defensibility 

• Bonds used in curve 

construction 

• Breakdown of Issuers by Credit 

Rating & maturity 

• Z-spreads 


For Illustrative Purposes Only. Credit Ratings are prepared by S&P Global Ratings. 



Summary 

• S&P Global is committed to providing high quality transparent data and analytics to meet 

client demands 

• Technology is a key strategy to meet ever changing needs 

• Transparency, Transparency, Transparency 


written approval of S&P Global Market Intelligence. 

Private & Confidential 28

Thank You 


written approval of S&P Global Market Intelligence. 

29

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