The Supranationals Edition 2023 includes comparative data for 30 supranational institutions with public ratings assigned by S&P Global Ratings. The ratings on the International Investment Bank were withdrawn in April 2023.

The data includes our preferred creditor treatment (PCT) ratio, which measures how much an institution benefits from its PCT status, as well as ratios related to the institutions' governance structure and extraordinary shareholder support in the form of eligible callable capital.

Balance-sheet, off-balance-sheet, and income statement items address size and profitability, while the ratios address capital adequacy, credit quality and loss provisioning, leverage, liquidity, and profitability.

We used the most recent data we received from the institutions to calculate the risk-adjusted capital (RAC) and liquidity ratios, incorporating the latest rating parameters. Most of the RAC and liquidity data is based on December 2022 financial information unless the information was not made available. Balance-sheet data and corresponding ratios are based on fiscal year-end accounts.

Historical data for the years 2017-2022 is generally as of the end of the fiscal year as each institution defines it. For the majority of institutions, the fiscal year-end is Dec. 31. For the International Bank for Reconstruction and Development, the International Finance Corp., and the International Development Association, the fiscal year-end is June 30. The Islamic Development Bank and the Islamic Corp. for the Development of the Private Sector reporting periods correspond to the Gregorian calendar.

A Guide To The Tables' Main Components

Purpose-related exposure

Gross disbursed loans, securities held in lieu of loans, equity investments, and guarantees together constitute an institution's purpose-related exposure (PRE). PRE is a simple numerical indicator of an institution's aggregate policy impact (ignoring the value of the catalytic role and the advisory and technical services that many of these institutions provide, as well as the efficiency with which funds are spent).

Preferred creditor treatment

Our PCT ratio helps us determine how much an institution benefits from its PCT status. The ratio sums, with separate weights, current exposures in arrears as well as exposures that historically entered or were expected to enter arrears, and divides this amount by the institution's total sovereign exposure.

Callable and paid-in capital

Our measure of eligible callable capital only includes callable capital from shareholders rated at or above the stand-alone credit profile of the institution. We make this distinction because in market conditions that would lead to an institution being on the verge of default and thus resorting to a capital call, we anticipate that the shareholders would be under similar stress.

Paid-in capital as reported on an institution's balance sheet may be adjusted to increase comparability, given differences in accounting treatments. Adjustments include subtractions of 1) the portion of the paid-in capital that is not yet due (when carried as an asset), 2) receivables on account of subscribed capital, 3) restricted currency holdings, and 4) maintenance of the value of payments receivable, all of which may be unavailable to meet an institution's obligations in a time of financial stress and, hence, are not reliable components of its cushion for losses.

Shareholders' equity

Shareholders' equity as reported on an institution's balance sheet may be adjusted by subtracting the adjustments to paid-in capital from the reported shareholders' equity, investments in funds whose value is highly uncertain, and other adjustments when deemed material (for example, an unrecognized pension deficit). Adjusted shareholders' equity is also called adjusted common equity (ACE). To arrive at total adjusted capital (TAC), we add to ACE eligible preferred stock and hybrid capital instruments (subject to limits).

Risk-adjusted capital

The RAC framework is our starting point for a capital adequacy assessment on a multilateral lending institution (MLI), and it represents a more granular approach compared with our previous capitalization ratios and credit quality index. It quantifies risks beyond credit risk in the sovereign and nonsovereign loan and equity portfolios and allows us to make comparisons across the asset class.

The RAC ratio is equal to TAC divided by risk-weighted assets (RWAs). To determine an MLI's RWAs, we apply specified risk weights to its various exposures. The methodology we use to determine RWAs before adjustments is identical to the one we use for banks to ensure the comparability of these entities' RAC ratios. We use the sovereign ratings for the risk weights of loans and other exposures to sovereigns, and we use our Banking Industry Country Risk Assessments and economic risk scores for countries to calculate the risk weights of lending to the private sector in those countries (see "Banking Industry Country Risk Assessment Methodology And Assumptions," Dec. 9, 2021). Equities receive a risk weight based on the volatility of the markets where they are invested, consistent with S&P Global Ratings' insurance and financial institutions capital frameworks.

We make specific adjustments to reflect unique traits of multilateral institutions. The RAC incorporates key parameters related to probabilities of default and loss-given-default assumptions to reflect our view of the strength of the PCT. To adjust for concentration and diversification, we generally follow "Risk-Adjusted Capital Framework Methodology" but introduce a single-name concentration charge for sovereign exposures and remove adjustments not relevant for MLIs. We calibrated the RAC risk charges to our view of an 'A' stress scenario, as described in "S&P Global Ratings Definitions," published Nov. 10, 2021. Specifically, an 8% RAC ratio indicates a level of capital able to withstand an 'A' rating level of stress and corresponds to our adequate assessment of an MLI's capital and earnings.

Liquid assets

Liquid assets include cash, deposits in banks, and holdings of high-quality securities, regardless of maturity. They exclude securities held by some institutions in lieu of loans, which are more properly viewed as, and are included in, PRE.

Gross debt

Gross debt includes short-term as well as medium- and long-term debt. One-year debt service includes interest expense for the latest year (as an imperfect proxy for the following year's interest expense), as well as year-end short-term debt and the scheduled amortization of medium- and long-term debt during the current year.

Liquidity

The assessment of an MLI's liquidity position centers on a liquidity gap analysis. We calculate liquidity gap ratios at six- and 12-month time horizons. The denominator for each ratio is the sum of all liabilities maturing by or on the horizon date, while the numerator is the sum of the assets discounted for either credit risk or liquidity risk. We also include a stress scenario where we assume the MLI would need to accelerate scheduled disbursements.

Funding

We base the assessment of an MLI's funding mix mostly on the diversification of its funding sources and its access to capital markets. We also observe credit spreads on an MLI's bonds to the extent they indicate a shift in the MLI's credit fundamentals. Finally, we analyze the structural match between the duration of an MLI's assets and liabilities, looking at the schedule of its assets and liabilities over the current year and next two years.

Table 1

Table 2a

Table 2b

Table 3a

Table 3b