The Texel Group welcomes new updates to ‘Supranationals Ratings Criteria’ from Fitch Ratings to aid further lending from Multilateral Development Banks
(NEW YORK, U.S.A.) 17th April, 2023 – Last week, Fitch Ratings (Fitch) updated its ‘Supranationals Ratings Criteria’. One of the key changes made within the criteria was to allow for an increase in the maximum notch uplift by Multilateral Development Banks (MDBs) in the rating of an asset through the use of credit insurance from 3 to 6 notches.
As an example of the impact this will have, the credit insured portion of a BB+ rated asset can now receive the full benefit of insurance cover from an A+ rated insurer, in contrast to a BBB+ ceiling for a BB+ rated asset using insurance with the 3-notch maximum uplift.
The Texel Group welcomes this amendment as it is reflective of the nature and performance of the credit insurance product. “The strength and support of the credit insurance market to help MDBs expand their lending deserves this recognition and it will also be of increasing importance as MDBs continue to grow their use of credit insurance across different structures for mobilization and capital management purposes,” said Ben Roberts, President of Texel Americas.
Dan Osman, Chief Underwriting Officer for Aspen Insurance UK Ltd and Head of Credit and Political Risks at Aspen, a leading provider of credit insurance to MDBs commented, “This is positive news and demonstrates that, with continued learning and collaboration between the insurance market, and such key agencies as Fitch, the full potential of the credit insurance product can be realized. All of this will lead to providing greater support to the global economy, and, in particular, developing nations where the need for private capital to support growth remains crucial.”
“Of course, rating agency recognition of credit insurance as a credit risk mitigant ultimately feeds into the external credit ratings of the MDBs. Therefore, for smaller or regional MDBs, this change may be especially impactful as it will help support their ratings that will in turn minimize the funding costs from capital market issuances,” added Roberts. “We’ve appreciated the engagement from Fitch in looking into this topic and the rating agencies will continue to play an important role in supporting MDBs using credit insurance going forward. There are certainly other areas in the criteria set out by the rating agencies that are worth discussing further, to ensure they fully reflect how the credit insurance product operates and its benefits.”
About The Texel Group
The Texel Group is a market-leading specialist insurance broker, primarily focused on the development, structuring and execution of credit and political risk insurance policies for our clients. Founded in 1997, Texel has grown to have over 70 employees across 5 offices globally (Brussels, London, Los Angeles, New York, and Singapore). Texel also owns a Managing General Agent called ‘Tierra’, which is dedicated to supporting sustainable project finance transactions with credit insurance capacity. The Texel Foundation provides grants to a range of charities in health, education, social impact, and artistic opportunity.
Ben Roberts, President – Texel Americas and Meridian Finance Group
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