In the face of silence from the room he explained that Botswana, Mauritius and Morocco carry that distinction while Algeria, though not always consistent, has been showing positive signs towards a positive investment grade rating.
Merchant questioned why underlying figures and assumptions forming the Global Emerging Markets Risk Database (GEMs) Consortium database were not readily available for more accurate credit ratings.
GEMs is a group of 26 multilateral development banks and development finance institutions.
The Consortium released two publications in October last year which provide insights on the level of credit risk in emerging markets and developing economies, according to the investment experience of the members.
The one publication looks at the credit performance of lending to private and public counterparts. According to GEMs, the average annual default rate of lending to private entities at 3.56% is broadly aligned with many non-investment grade firms in advanced economies, and the average recovery rate of 72.2% is higher than many global benchmarks.
Although the GEMs statistics reflect the unique experience of MDBs and DFIs, the results provide valuable information on the investment risk in EMDEs, an area characterised by a lack of available credit risk data.
The second publication provides default rates and – for the first time – recovery rates for sovereign and sovereign-guaranteed lending based on an expanded range of 40 years of data.
Results shows an average annual default rate of 1.06% and an average recovery rate of 94.9% and complement the GEMs statistics on private and public counterparts to provide a comprehensive view on EMDEs credit risks.
These increasingly granular statistical publications by the GEMs Consortium address the call by the G20 and other stakeholders to provide investors greater insights into credit risks in emerging markets, thereby allowing them to better guide their asset allocations.
GEMs was established in 2009 as a bilateral initiative between the European Investment Bank and the International Finance Corporation (World Bank Group). Since then, the GEMs Consortium has grown to include 26 members.
You can download the GEMS default statistics publication on private and public lending 1994-2023 and the GEMS default statistics publication on sovereign and sovereign guaranteed lending 1984-2023
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