10/28/2024 | Press release | Archived content
• Multilateral Development Banks (MDBs) and major credit rating agencies convened to discuss updates to credit rating criteria. These updates aim to enable MDBs to optimize their balance sheets and increase their lending capacity to better serve their countries and regions, while preserving their current credit ratings.
Chief Financial Officers and Chief Risk Officers from multilateral development banks and other development finance institutions (jointly referred to as MDBs) met on Wednesday, October 23, with the three major credit rating agencies (CRAs) to advance their ongoing dialogue on updating CRA's rating criteria.
This was the fourth session since the release of the G20-sponsored Independent Review of Multilateral Development Banks' (MDBs) Capital Adequacy Frameworks, which called for close collaboration between MDBs and credit rating agencies to enhance rating criteria and adapt existing frameworks to maximize MDB lending capacity.
While each MDB faces distinct challenges and financial constraints, all participating organizations agree on the importance of ensuring that rating criteria accurately reflect the risk mitigation inherent in MDBs' business models. The roundtable focused on three major themes:
MDBs also shared updates on the implementation of Capital Adequacy Framework recommendations, highlighting recent publications of studies from the Global Emerging Markets Risk Database Consortium (GEMS) and various MDBs that highlight critical indicators of MDB credit strength, including historic loan performance with low levels of probability of default (PD) and loss given default (LGD). Participating MDBs highlighted the importance of callable capital and the need for CRAs to review how it is currently accounted for. A group of MDBs will collaborate on harmonizing how callable capital is valued for capital adequacy purposes.
MDB Chief Financial and Chief Risk Officers urged CRAs to incorporate the insights and perspectives shared during the discussion into their rating criteria. CRAs, in turn, provided feedback, welcomed the ongoing engagement, and recognized MDBs' efforts as a clear commitment to enhancing financial frameworks and maximizing shareholder value.
This session took place at the Inter-American Development Bank's Headquarters in Washington, D.C., in the context of the Annual Meetings of the International Monetary Fund Annual and the World Bank Group. All participating MDBs reiterated their commitment to continued collaboration with CRAs, with the next roundtable scheduled for April 2025.
Participants in the roundtable included:
MDBs and development finance institutions:
Credit Rating Agencies: