Partnering with Moody's

[Guest]

.

[lakshmi]

SAN FRANCISCO, CA--(Marketwire - 09/28/09) - Kiva.org -- the world's first person-to-person micro-lending website -- today announced a landmark partnership with Moody's Corporation  to bring their credit ratings and risk management expertise to online microfinance.

Kiva.org estimates that Moody's in-kind services and financial support will spur the growth of microlending through its website through improved transparency and analytical rigor, and an expanded on-the-ground presence. Kiva projects that the partnership will contribute towards raising $1 billion in microloans by 2015, benefiting an estimated one million people directly and 32 million indirectly through economic development and improved living standards.

Moody's Investors Service will assign initial ratings, pro bono, to 20
    of Kiva's MFI Field Partners, providing an independent assessment of
    creditworthiness that individuals can consider when selecting an
    entrepreneur to lend to.


http://finance.yahoo.com/news/Kivaorg-Enhances-Online-iw-558863288.html?x=0&.v=1

Would that be the same "analytic rigor"  that Moody's used in rating all the subprime toxic CDS sludge?

[charity]

Would that be the same "analytic rigor"  that Moody's used in rating all the subprime toxic CDS sludge?

  That was actually the second thought that came to my mind too!  The first thought however, is that this will be very useful and good. 

-- Moody's Investors Service will assign initial ratings, pro bono, to 20
    of Kiva's MFI Field Partners, providing an independent assessment of
    creditworthiness that individuals can consider when selecting an
    entrepreneur to lend to.

--  Moody's Foundation will fund the establishment of a Moody's Field
    Specialist Program to recruit local microfinance specialists who will help
    MFI Field Partners implement best practices in lending and loan servicing,
    and to identify new MFI Field Partners.

--  Moody's Analytics will train Kiva staff, including Moody's Field
    Specialists, in credit risk management.
   

Hopefully with more guidance Kiva can come up with a much more rigorous, transparent way to calculate and convey risk to lenders.  Confusion over risk (with both the MFI and now currency) is one of the major concerns I see here on Kivafriends.  Also, hopefully the people in the rating industry have taken a hard look at their practices.    I would imagine, that just because we are dealing with MFIs in developing nations, that they would make sure to take a thourough look, rather than make the same mistake of assuming one mortgage is as good as another, one MFI is as good as another...

[RichardF]

Interesting.  I was just today looking at the PlaNet Finance Group's microfinance rating agency, Planet Rating.

PlaNet Finance - Overview

PlaNet Finance is an international non-governmental organization (NGO) that aims to alleviate poverty worldwide through the development of microfinance.

PlaNet Finance Group is an international organisation whose mission is to fight against poverty through the development of microfinance. As the microfinance expert, PlaNet Finance Group provides a diversified set of services to help grow microfinance:

• PlaNet Finance Advisory Services, the technical assistance and consulting provider;
• PlaNIS, the business unit specialised in microfinance fund advisory, structuration and management;
• Planet Rating, the microfinance rating agency;
  
  • Rating Reports, e.g.,
    
    • CREDIT, Cambodia - PDF
    • FAPE, Guatemala - PDF
    • Prisma, Peru - PDF
    • Zene Za Zene, Bosnia and Herzegovina - PDF
    • Enhanced GIRAFE Methodology - PDF
  • Social Performance Ratings
    
    • e.g., Prisma, Peru - PDF
    • Social Performance Rating Methodology - PDF
• MicroCred, the microfinance investment company;
• PlaNet Guarantee, the microinsurance specialist;
• FinanCités, the venture capital company for microentrepreneurs in French deprived urban areas.

The GIRAFE rating system offers a comprehensive analysis of the risk profile of MFIs on Governance, Information, Risk, Actvities, Funding and Efficiency.  The Social Performance rating system covers topics like institutionalization of the social mission, targeting and services offering, and social responsibility.

Kiva previously has endorsed MFTransparency in its efforts to promote transparent pricing in the microfinance industry.

I can't wait to see what the Kiva-Moody partnership offers "retail lenders" like us along these lines of MFI ratings and loan transparency information.

[Dagfinn]

Moody's Investors Service will assign initial ratings, pro bono, to 20
    of Kiva's MFI Field Partners, providing an independent assessment of
    creditworthiness that individuals can consider when selecting an
    entrepreneur to lend to.

As an individual I also need an assesment of the creditworthiness of Kiva itself to consider and more; if only 20 will be rated, I suggest not to let the horse itself choose which but the lenders that one advertise to serve.

- Dagfinn A