Readout of the Third MDBs & Credit Rating Agencies Roundtable

Paris - Chief financial officers and chief risk officers from major multilateral development banks and other development finance institutions (jointly referred to as MDBs) convened with the three major credit rating agencies (CRAs) to continue their dialogue on updating CRAs’ rating criteria.

This roundtable was the group’s first session of 2024 and served as a tangible demonstration of the MDB community’s collaborative efforts to advance on the recommendations of the G20-sponsored Independent Review of Multilateral Development Banks' (MDBs) Capital Adequacy Frameworks.

The MDBs’ pursuit of the Sustainable Development Goals requires that they make the most efficient use of available resources and maximize their lending capacity to better support underserved communities, while preserving their current credit ratings. This requires that rating criteria properly reflect the risk mitigation embedded in MDB business models.

This session took place in Washington, D.C., on the sidelines of the Spring Meetings of the International Monetary Fund and the World Bank Group.

The roundtable focused on three major themes:

• The role of preferred-creditor treatment and its recognition in credit-rating methodology;
• Portfolio concentration and concentration penalties embedded in MDB assessments that do not fit the MDB-specific business model; and
• Risk-transfer approaches and recognition within the credit-rating methodology.

MDBs also provided an update on progress achieved toward the implementation of Capital Adequacy Framework recommendations, including the conclusions of the callable capital review undertaken by AfDB, ADB, EBRD, IBRD and the IDB.

Chief financial officers and risk offices re-emphasized the need for CRAs to consider the points and perspectives shared during the discussion and to reflect them in their rating criteria. CRAs offered valuable perspectives and welcomed the ongoing engagement through the roundtable process, noting it as a positive development and a commitment from MDB management teams to ensure value for shareholder resources.

Chief financial officers and risk offices reiterated their commitment to ongoing collaboration with

CRAs. The dialogue is set to continue, with a fourth roundtable scheduled for October 2024.

Participants in the roundtable included:

MDBs and development finance institutions:

1. Asian Development Bank (ADB)
2. Asian Infrastructure Investment Bank (AIIB)
3. African Development Bank (AfDB)
4. Council of Europe Development Bank (CEB)
5. Caribbean Development Bank (CDB)
6. Development Bank of Latin America and the Caribbean (CAF)
7. European Bank for Reconstruction and Development (EBRD)
8. European Investment Bank (EIB)
9. FONPLATA Development Bank
10. International Fund for Agricultural Development (IFAD)
11. International Finance Corporation (IFC)
12. Inter-American Development Bank (IDB)
13. IDB Invest
14. Islamic Development Bank (IsDB)
15. Multilateral Investment Guarantee Agency (MIGA)
16. New Development Bank
17. Nordic Investment Bank (NIB)
18. OPEC Fund for International Development (OPEC Fund)
19. World Bank

Credit rating agencies:

1. Standard & Poor's Global Ratings
2. Moody's Ratings
3. Fitch Ratings

Third-party presenters from academia, financial consulting, and financial markets.