DBRS Releases New Supranational Institutions Methodology

DBRS has today released a new methodology entitled Rating Supranational Institutions. The purpose of this methodology is to explain the criteria that DBRS intends to use in issuing ratings on supranational institutions, or multilateral financial institutions (MFIs), and to provide market participants with insight into the rationale behind DBRS’s rating opinions in a transparent manner. The methodology was submitted for public consultation on January 21, 2014.

DBRS received comments from several organizations, all of which requested that their comments remain confidential. Most of the comments received sought additional clarity regarding DBRS’s approach to rating MFIs, particularly the adaptations of the analytical framework used for the intrinsic assessment, which is drawn from DBRS’s Global Methodology for Rating Banks and Banking Organisations, June 29, 2012. Some commenters also suggested that minor adjustments be made to the methodology to ensure that the unique characteristics of particular MFIs would be fully taken into account.

In response to the comments received, DBRS made several editorial changes to the text to provide additional clarity regarding DBRS’s approach to rating MFIs. In particular, the final methodology includes modified versions of the grids used in the Global Banking Methodology, which illustrate the adaptations relevant to assessing the intrinsic strength of MFIs. Other minor changes have been adopted to ensure that the analytical framework is sufficiently flexible to take the unique features of specific MFIs into consideration.

This methodology takes the place of one existing methodology, Rating Supranational Institutions: European Financial Stability Facility (EFSF). The change in methodology is not expected to have any material impact on existing credit ratings.

DBRS criteria and methodologies are publicly available on its website www.dbrs.com under Methodologies.

For more information on sovereign credits or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.