Repricing Emerging Market Risk: Sovereign Ceilings, Guarantees, and the Cost of Capital

Organized by: Environmental Defense Fund (EDF), Columbia Center on Sustainable Investment (CCSI), Africa Practice, Emerging Markets Investors Alliance (EMIA)Emerging markets and developing economies face a persistent cost-of-capital penalty that makes climate and development financing more expensive than the underlying project risks often warrant. One driver is the sovereign ceiling — the practice of capping a project's credit assessment at or near its host country's sovereign rating, regardless of the project's own risk profile. Our recent work on sovereign ceilings argues that this approach can misclassify project-level credit risk by treating sovereign risk as a single, undifferentiated factor, rather than disaggregating the specific channels through which it affects a given project. Getting that assessment right — and understanding where credit enhancements like guarantees can help — has direct consequences for the cost of capital in EMDE infrastructure. This invite-only roundtable and working session brings investors and practitioners together for a solutions-focused conversation on repricing this risk more accurately.A short panel will ground participants in the methodology and the case for change, followed by a facilitated world café where tables work through the levers available to different stakeholders — investors, policymakers, regulators, and data providers — both within today's system and beyond it. The session is designed to leave participants with a shared understanding of the sovereign ceiling problem, greater clarity on its downstream effects, and a practical sense of ownership over what comes next.