The World Bank Group, through its private sector arm, theInternational Finance Corporation (IFC), has announced the completion of itsfirst-ever securitisation transaction. In a statement on Friday, the Washington-based institutionsaid the move will create a new pathway for institutional private capital toflow into emerging markets. Securitisation is a process in which certain types of assetsare pooled so that they can be repackaged into interest-bearing securities. The World Bank said the $510 million collateralised loanobligation (CLO) marks the beginning of an “originate-to-distribute” model thatrepackages IFC loans into rated securities. The securities, according to the lender, are transformedinto an investable asset class that meets the standards of global institutionalinvestors such as pension funds, insurance firms, and asset managers. Ajay Banga, the president of the World Bank Group, said themove would unlock significant resources for developing economies while freeingup the bank’s own balance sheet to expand its reach. “Mobilising private investment at scale is essential tocreating the jobs that give people a ladder out of poverty and begin thejourney of changing a family’s trajectory for generations,” Banga said. “This is step one in an originate-to-distribute strategythat holds significant potential to attract private capital at scale. It alsofrees up our balance sheet so we can support more countries and moreprivate-sector players.” The World Bank said the transaction, listed on the LondonStock Exchange, drew strong investor interest. “It comprises a $320 million senior tranche sold to privateinvestors, a $130 million mezzanine tranche insured by a consortium of creditinsurers, 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 originatedistribution effort was an area of focus identified by the Private SectorInvestment Lab, an advisory group launched in June 2023 with the aim ofidentifying barriers to private sector investment in emerging markets, andproviding real world solutions to these challenges”.
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