CDB has maintained a strong record of preferred creditor treatment (PCT) despite increased stress in its borrowing member countries and has strengthened its risk management functions. While many borrowing member countries experienced a sharp downturn in revenue as tourism plummeted in 2020 and 2021, they continued to make full and timely payments to CDB. To some extent, this was made possible by CDB providing debt service support through its concessional window for some of its members' ordinary capital obligations, although this program expired by the end of 2021. This initiative, proposed by CDB's management and supported by its board, was intended to provide borrowing member countries with fiscal space to address the negative social and economic impacts of COVID-19. We believe CDB has carefully managed its portfolio, carefully balancing the use of regular and concessional resources and managing concentrations.

Our view of CDB's financial risk is based on its ample capital and liquidity buffers, which enable the bank to mitigate economic stress for its primary borrowing members. Its risk-adjusted capital (RAC) ratio, based on year-end 2021 financial data and using rating parameters as of May 2022, remained relatively stable compared with year-end 2020 at 26.5%. Moreover, CDB's eligible callable capital provides it with an additional buffer against unexpected deterioration in its RAC ratio after adjustments