Attachment_3 _OPIC_Risk_Rating_Scorecard.pdf

Attachment #3

Risk Rating- Scorecard OPIC Methodology.

OPIC risk rates all the assets in its Finance portfolio in accordance with a risk rating scorecard methodology implemented in 2014. Risk ratings range for “1-12”, with a “1” being an exceptional credit and a “12” being a credit in default. Ratings of “8” or worse are considered “criticized” and require additional monitoring given their higher risk profile. Ratings “8-12” are assigned a one year probability of default ranging from 11.6% through 100%.

A rating of “12” is assigned to all credits in payment default once they are greater than 90 days past due or credits that are restructured to avoid imminent payment default. Credits rated “12” remain at that risk rating until they have been “cured” for 18 months past the date when all payments become current, or until they demonstrate the ability to meet the restructured terms for at least 18 months.

Loss given default (LGD) is determined based on the seniority of the loan, security arrangements, and historical recovery experience of the industries/structures covered by the scorecard/model. For projects with a rating “12”, the officer responsible for the project provides a best estimate of loss, based on the type and value of the collateral, enforceability and other security/guaranty arrangements.