 For group of obligors sharing similar credit risk characteristics such as a RMBS or pool of loans, a PD may be derived for a group of assets that is representative of the typical (average) obligor of the group.In comparison, a PD for a bond or commercial loan, are typically determined for a single entity.Under Basel II, a default event on a debt obligation is said to have occurred if

The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor.