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This report describes and documents Moody's version of its RiskCalcTM default model for private firms. RiskCalcTM analyzes financial statement data to produce default probability predictions for corporate obligors- particularly those in the middle market. We discuss the model's derivation in detail, analyze its accuracy, and provide context for its application. The model's key advantage derives from Moody's unique and proprietary middle market private firm financial statement and default database (Credit Research Database), which comprises 28,104 companies and 1,604 defaults. Our main insights and conclusions are: • The relationship between financial variables and default risk varies substantially between public and private firms. An important consequence of this is that default models based on public firm data and applied to private firms will likely misrepresent actual default risk. • RiskCalcTM generates 1- and 5-year expected default frequencies, as well as a mapping into Moody's standard rating categories. Hence, the meaning of the model output is easily understood and amenable to benchmarking and quantitative portfolio risk management techniques. • Comprehensive testing and validation suggest that RiskCalc's predictive power is superior to that of other publicly available benchmark models and is robust across non-financial industry sectors, and over time. • RiskCalcTM was developed to achieve maximum predictive power with the smallest number of inputs. It requires just 10 financial ratios & indicators computed from 17 basic financial inputs. • RiskCalc's predictive power derives, in part, from its meticulous transformation of input financial ratios, which are highly 'nonnormally ' distributed, as well as the large number of defaulting private firms used in its estimation