Multilateral Development Banks’ Preferred Creditor Status

...Sovereigns continue to prioritise payments to supranationals over other creditor groups. Fitch Ratings' preferred creditor status (PCS) study of loan performance data from 22 multilateral development banks (MDBs), covering 2000-2024, finds that sovereigns are three times less likely to default on obligations to supranationals than to private creditors, and 16 times less likely to do so than to official bilateral creditors. Market data indicate that recoveries on sovereign loans to MDBs are higher than those on sovereign loans to private creditors. Fitch estimates that recoveries on defaulted sovereign exposures to private creditors average between 30% and 50%, while recoveries for MDBs are estimated at 70% to 91%....

Special Report