The modeling of Low Default Portfolio (LDP) is proved to be a challenge to banks. However, prior the recent global financial crisis (GFC), the regulator encouraged banks to develop PD and LGD model for LDPs. You may find such papers from the website of Basel Committee (BCBS), FSA, HKMA, etc. Pls. refer to the paper attached as evidence. The atmosphere changed after the GFC. Nowadays, the regulator choose to restrict the use of model estimated LGD in regulatory capital calculation.