MICROCAPITAL STORY: Planet Rating of Paris, France, Introduces New Microfinance Rating Methodology

In a press release Paris-based Planet Rating, a microfinance rating agency, announced a number of changes in its GIRAFE rating methodology. These changes take effect as of January 14, 2008 and adjust rating factor weightings and evaluation methods with regards to microfinance institution (MFI) governance, capital structure, market/financial risk, and profitability structure.

GIRAFE (Governance, Information, Risk Management, Activities, Funding and liquidity, Efficiency and profitability) Ratings, initially created by Gilles Galludec of CGAP and Finadev, evaluate the performance and institutional risk of mature microfinance institutions (MFIs) and provide an evaluation of the organization’s financial and institutional strength (see sample report). The recent changes in rating methodology introduced three new rating factors; liquidity risk, revenue quality, and asset optimization and changed the weighting within the six domains (Governance, Information, Risk Management, Activities, Funding and liquidity, Efficiency and profitability). These changes are part of Planet Rating’s efforts to address the more complex institutional and financing structures becoming increasingly available to MFIs.

Planet Rating of Paris, France, is a global MFI rating agency. It was established in 1999 as a division of Planet Finance and was spun off to become a private and independent company in 2005. Planet Rating currently has regional offices in Lima, Dakar, Kampala, and Beirut.

By Jacob Keller

Additional Resources:

Planet Rating: Home, GIRAFE, sample report, six domains

MicroFinance Gateway: changes, rating factors

Planet Finance: Home

Mix Market Profile of Planet Rating: http://www.mixmarket.org/en/partners/partners.show.profile.asp?ett=127

CGAP: Home

Finadev: Home

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