The World Bank Group has released a significant amount of proprietary data aimed at increasing investments in emerging markets. This move is designed to provide investors with essential tools for better assessing investment risks.
The newly published data includes detailed information on the credit-risk profiles for both private and public sector investments across various developing countries. This encompasses historical data on sovereign defaults and recovery rates from the International Bank for Reconstruction and Development (the World Bank's lending arm), alongside private sector default statistics categorized by internal credit ratings from the International Finance Corporation.
Amidst a growing debt crisis in emerging markets, World Bank President Ajay Banga emphasized that the primary goal of this data release is to attract more private-sector capital to these economies to foster impact and job creation. This initiative comes as the World Bank, alongside 24 other multilateral development banks, faces increased calls from investors, bankers, and the G20 to make their collective data on $1.5 trillion of emerging market debt available. This data is currently stored in Luxembourg within the Global Emerging Markets Risk Database (GEMs).
Financial institutions, including Citigroup Inc. and Mitsubishi UFJ Financial Group Inc., argue that access to this data will enable them to refine their risk calculations. This could potentially lower lending costs and broaden the scope of financing for projects and regions previously deemed too risky.
The World Bank's statistics, while separate, are intended to complement the data found in GEMs, with plans to possibly integrate the two in the future. This development has been welcomed by key financial figures, including Faheen Allibhoy of JP Morgan Chase & Co., who noted the importance of these disclosures for making informed investment decisions in emerging markets and developing countries.
Moreover, the release of this data is anticipated to assist credit-rating agencies and may protect the debt ratings of multilateral development banks (MDBs) as they aim to increase capital deployment in development and climate finance. Kathrin Muehlbronner of Moody’s Ratings highlighted the significance of this detailed data for MDBs, suggesting it could offer downside protection and assist in risk evaluation adjustments amidst increased lending activities.
Julie Monaco of Citigroup further recognized the publication of the World Bank and GEMs data as a crucial step in the evolution of MDBs, highlighting its potential to attract private capital for addressing climate change and development challenges.
