Microfinance: Taking Root in the Global Capital Markets, Part 2

Establishing a methodology and criteria for rating microfinance institutions
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This publication aims to contribute to a better understanding of microfinance institutions, further the development of a secondary market for their debt instruments, and help to promote the capabilities of domestic markets. The publication is the result of collaboration between Standard & Poor (S&P) and the Inter-American Development Bank’'s Multilateral Investment Fund and contains two articles:

  1. A Pilot Project To Establish A Methodology And Criteria For Rating Microfinance Institutions: This article outlines findings derived from a pilot program that included the rating of 10 MFIs in Latin America. The exercise established globally recognized metrics to enhance transparency within the microfinance industry and enable investors to compare MFI investment opportunities within and across borders as well as against other types of investments.
  2. Microfinance Institutions: Methodology And Assumptions: Key Credit Factors: This article addresses the outcome of this effort. It explains the refinements and adaptations made to S&P's bank rating criteria to assess the credit worthiness of MFIs. It also highlights major areas of the financial institutions criteria that S&P emphasizes when reviewing MFIs.

The publication also includes criteria for rating MFI securitizations and summary analyses of all MFIs rated by Standard & Poor’s.

About this Publication

By MIF, IDB & Standard & Poor's