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 About the Fund

About the Fund

Co-Financing Scales for Global Risk Assessments and Credit Risk Ratings

The Rating Fund II provides partial financing of credit rating and assessment services for MFIs. It finances credit ratings and assessments of MFIs by pre-qualified rating and assessment agencies.

The Rating Fund II covers Latin America and the Caribbean. The maximum level of co-financing from the Fund varies depending on how many ratings an MFI has previously undertaken (either under the Rating Fund initiative (both I and II) or independently (see table below). An MFI may apply for co-financing from the Rating Fund up to three times, and there must be a minimum of 9 months between each rating/assessment funded by the Rating Fund II.
 

First Rating
Second Rating
Third Rating
80%
max $8,000
60%
max $6,000
40%
max $4,000


 

One of the most important principals of the Rating Fund II is sharing costs; indeed, the Rating Fund II will cover a portion of the assessment or rating fees but not the total charge. The MFIs are obliged to divulge any other financing source used to cover the assessments or rating fees. The co-financing amount disbursed by the Rating Fund II is calculated after having taken under consideration any and all other financing source(s) which the MFI might be beneficiating from. The co-financing formula of the Rating Fund is measured as so:
 

(Total cost - financing from other sources) X % of co-financing = Amount of Rating Fund contribution


 

For example:

Total Cost of the assessment: $10,000
Funds granted from a governmental agency: $1,000



Using the formula hereinabove, and assuming a first rating with the Rating Fund II (80%co-financing), the following results can be obtained:

($10,000-$1,000) X 80%= $7,200 Co-financing from Rating Fund II
  $1,800 Co-financing from MFI

Whichever misleading representation reflecting an erroneous rating or false information involving the financing source apt to alter all relevant figures (for example, the existence of figure(s) which might allow an evaluation said to be “free of charge” for the MFI) will bring upon the relevant party disciplinary actions which might include the obligation to return the funds to the Rating Fund II and the public divulging of all parties and/or institutions involving in such an illegal scheme.

 

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