GEMs Data Reveals Low Defaults and Strong Recoveries Across Emerging Market Lending

The publications cover private and public lending from 1994 to 2025, with sovereign and sovereign-guaranteed lending records stretching back to 1984.

Investors weighing lending opportunities in emerging markets have a more detailed set of figures to work with following the release of three new publications from the Global Emerging Markets Risk Database (GEMs) Consortium. Drawing on pooled lending records from multilateral development banks (MDBs) and development finance institutions (DFIs), the reports show low defaults and strong recoveries across private, public and sovereign portfolios. The expanded evidence gives investors, credit rating agencies, regulators and policymakers a clearer basis for assessing credit risk in emerging markets and developing economies (EMDEs).

Decades of lending records bring credit risk into sharper focus

The publications cover private and public lending from 1994 to 2025, with sovereign and sovereign-guaranteed lending records stretching back to 1984. They examine how frequently borrowers default, how much lenders recover after a default and how those outcomes differ by region, income group, sector, financing structure and currency. For anyone deciding whether to finance a business or public project, these distinctions matter because broad market averages can conceal differences between borrowers and the terms under which they receive financing.

The three reports—Default and Recovery Statistics: Private Lending 1994–2025, Default and Recovery Statistics: Public Lending 1994–2025, and Default and Recovery Statistics: Sovereign and Sovereign-Guaranteed Lending 1984–2025—draw from what GEMs describes as the world's largest database of credit risk statistics on MDB and DFI lending in emerging markets. The consortium brings together leading MDBs and DFIs and is co-chaired by the European Investment Bank (EIB) and the International Finance Corporation (IFC), pooling institutional experience to help market participants make better-informed financing decisions.

New breakdowns explain what happens before and after default

The private lending report adds information on contract-lifetime default rates, financing currency, credit enhancements, default resolution and institutional actions. These details provide a fuller account of lending performance, including defaults over the life of a contract, the protections attached to financing and the steps institutions take when repayment problems arise. The public lending publication introduces analysis by currency type, default type, resolution type and actions taken, giving readers more information about both the nature of repayment difficulties and how lenders address them.

The sovereign report includes estimates for unresolved default events for the first time, alongside further analysis by income group, region and credit rating. Including unresolved cases extends the evidence beyond defaults whose outcomes are already known. Román Escolano, EIB Group Chief Risk Officer and GEMs co-chair, said the latest statistics demonstrate low defaults and strong recovery outcomes across the three portfolios, stressing the value of long-term institutional data in improving risk assessment and helping mobilise private capital for sustainable development.

A first look at lending spreads adds the returns perspective

A pilot analysis in the private lending publication examines credit spreads used to calculate returns, adding another dimension to the default and recovery figures. Based on submissions from GEMs member institutions covering 2006 to 2025, the analysis found an average total spread of 3.77%, which the release describes as consistent with typical market expectations. The pilot gives investors additional evidence to consider lending returns alongside repayment risk; its findings reflect the participating institutions' data rather than all lenders operating in emerging markets.

Federico Galizia, IFC Vice President and Chief Risk Officer and GEMs co-chair, described the pilot spread analysis from select member institutions as this year's most important update, saying it would help investors assess risks and opportunities when investing alongside MDBs and DFIs. Emerging economies need investment at scale to meet their development objectives, making accessible lending evidence valuable for financing decisions. U.K.-based financial-sector AI firm Galytix manages the database and produces the publications in collaboration with PwC Luxembourg. The reports are available on the GEMs publications website, and statistics are also accessible through a "GEMs" search on Bloomberg Terminal's DSET and the World Bank Group's Data360 open data portal.