World Bank launches first $510m securitisation deal to attract investment

The World Bank Group, through its private sector arm, the International Finance Corporation (IFC), has announced the completion of its first-ever securitisation transaction.

In a statement on Friday, the Washington-based institution said the move will create a new pathway for institutional private capital to flow into emerging markets.

Securitisation is a process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities.

The World Bank said the $510 million collateralised loan obligation (CLO) marks the beginning of an “originate-to-distribute” model that repackages IFC loans into rated securities.

The securities, according to the lender, are transformed into an investable asset class that meets the standards of global institutional investors such as pension funds, insurance firms, and asset managers.

Ajay Banga, the president of the World Bank Group, said the move would unlock significant resources for developing economies while freeing up the bank’s own balance sheet to expand its reach.

“Mobilising private investment at scale is essential to creating the jobs that give people a ladder out of poverty and begin the journey of changing a family’s trajectory for generations,” Banga said.

“This is step one in an originate-to-distribute strategy that holds significant potential to attract private capital at scale. It also frees up our balance sheet so we can support more countries and more private-sector players.”

The World Bank said the transaction, listed on the London Stock Exchange, drew strong investor interest.

“It comprises a $320 million senior tranche sold to private investors, a $130 million mezzanine tranche insured by a consortium of credit insurers, and a $60 million equity tranche. Goldman Sachs acted as arranger,” the statement added.

The IFC said it plans to roll out regular issuances, positioning the securitisation model as scalable and replicable.

According to the financial institution, “the originate distribution effort was an area of focus identified by the Private Sector Investment Lab, an advisory group launched in June 2023 with the aim of identifying barriers to private sector investment in emerging markets, and providing real world solutions to these challenges”.