MICROCAPITAL.ORG STORY: Kiva.org Partners with Moody’s to Receive Credit Ratings, Risk Management Tools, and Financial Support

According to a recent press release by Marketwire, Kiva.org, known as the first person-to-person online microfinancing website, plans to partner with Moody’s Corporation to provide pro bono credit ratings of partner microfinance institutions (MFIs), risk management training for staff, and financial support to expand its partnership with MFIs. [1]

Kiva.org, founded in 2005, is the first online website to allow individuals to make loans to entrepreneurs in developing areas around the world. The non-profit plays the role of a broker, between various MFIs’ clients that are seeking loans and individuals that are able to provide these loans. [2] According to statistics from Kivafriends.org, 200,790 entrepreneurs from 48 countries have received loans from 529,403 lenders, through 107 MFIs that operate as Kiva’s “field partners”. [3] The total value of all loans made through Kiva.org is worth USD 83 million. [3]

Moody’s Corporation is the parent company of Moody’s Investors Service, which provides credit ratings and research on financial markets, and Moody’s Analytics, which covers risk management, credit analysis, research, and training tools for financial institutions. The company, according to its website, has a revenue of USD 1.8 billion in 2008. [4] Moody’s also established The Moody’s Foundation, which is a charitable foundation that contributes to the communities in which the corporation does business. According to Moody’s website, the foundation has donated over USD 20 million since 2002. [6]

According to Kiva.org’s website, Moody’s has made a two-year USD 700,000 commitment which includes both in-kind services and direct financial contributions from The Moody’s Foundation. [5] Moody’s Investors Service is to assign credit ratings, free of charge, to 20 of Kiva’s field partner MFIs. [1] This service aims to increase transparency and information for individuals who want to make loans. Moody’s credit ratings are valuable to both Kiva and partner MFIs, since they are recognized as a standard rating in global capital markets, and may help MFIs raise capital and increase loans.

In addition, Moody’s Foundation plans to fund a program, called “Moody’s Field Specialist Program,” which aims to attract new MFI field partners for Kiva while also helping recruit local microfinance specialists to improve partner MFIs’ lending services. [10] Finally, Moody’s Analytics is to train Kiva staff members and Moody’s field specialist in credit risk management.

By Radhika Chandrasekhar, Research Assistant

Bibliography

[1] MarketWire. “Kiva.org Enhances Microfinance With Moody’s Credit Risk Expertise.” http://www.marketwire.com/press-release/KivaOrg-NYSE-MCO-1051119.html

[2] Kiva.org. About. http://www.kiva.org/about

[3] Kiva friends. http://www.kivafriends.org/

[4] Moody’s Corporation Organization. http://v3.moodys.com/Pages/atc.aspx

[5] Kiva.org. Supporters. http://www.kiva.org/about/supporters#moodys

[6] The Moody’s Foundation. http://www.moodys.com/cust/prodserv/prodserv.aspx?source=StaticContent/Free%20Pages/Moodys%20in%20the%20community/Moodys%20Foundation/Philosophy.htm&template=tmf&context=philosophytmf

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