GEMs: Challenging Risk Perception in Emerging Markets

The report, based on GEMs data, highlights an average default rate of 3.54% across $500 billion in MDB- and DFI-backed private loans, comparable to developed market benchmarks. Defaults peaked in the late 1990s but have stabilised at 3.29% over the past decade, reflecting structural reforms and market maturation. Even when defaults occur, MDB-backed loans demonstrate strong recoveries, with an average recovery rate of 72.9% and more than 50% of defaults recovering 90–100% of principal.