The World Bank Group, through its private sector arm, the International Finance Corporation (IFC), has successfully closed its first-ever securitization transaction, marking a major milestone in efforts to mobilize private capital for emerging markets. The transaction introduces a new model to attract institutional investment while allowing the World Bank Group to recycle its capital and support more developing countries and projects.
The $510 million collateralized loan obligation (CLO) repackages IFC loans into rated securities, creating a new asset class that meets institutional investment standards. By doing so, the initiative opens opportunities for pension funds, insurance companies, and asset managers—the world’s largest pools of capital—to invest more substantially in emerging markets.
World Bank Group President Ajay Banga highlighted the significance, stating that mobilizing private investment at scale is essential to creating jobs that give people a ladder out of poverty and change the trajectory of families for generations. He described the transaction as “step one in an originate-to-distribute strategy that holds significant potential to attract private capital at scale” and emphasized that it frees up the World Bank Group’s balance sheet to support more countries and private-sector players.
The transaction was listed on the London Stock Exchange and features three tranches: 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 the arranger for the transaction.
This inaugural CLO lays the foundation for regular issuances, establishing a scalable and replicable model for future growth. The initiative stems from the Private Sector Investment Lab, launched in June 2023, which aims to identify barriers to private sector investment in emerging markets and provide practical solutions. By unlocking institutional investment at scale, this transaction represents a pivotal step in expanding private sector participation in development, creating jobs, and driving sustainable economic growth in emerging markets.
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