The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has completed its first-ever securitisation transaction, marking a significant milestone in efforts to channel private institutional capital into emerging markets. The $510 million collateralised loan obligation (CLO) is a key part of IFC’s strategy to establish an “originate-to-distribute” investment model for developing economies.
The transaction involves repackaging IFC’s loan portfolio into rated securities, creating a new asset class that meets the risk and return requirements of global institutional investors, including pension funds, insurance companies, and asset managers. This innovative approach is expected to unlock access to the world’s largest pools of capital, freeing up IFC’s balance sheet to finance additional projects across developing countries.
World Bank Group President Ajay Banga highlighted the importance of mobilising private investment at scale to foster long-term economic transformation. “This initiative will create jobs and offer new opportunities for people to escape poverty, transforming lives for generations,” Banga said.
The CLO, which was listed on the London Stock Exchange, has attracted significant investor interest. It includes a $320 million senior tranche, a $130 million mezzanine tranche, and a $60 million equity tranche. Goldman Sachs acted as the arranger for the transaction, which is designed to be scalable and replicable for future issuances.
This securitisation addresses two critical development financing challenges: providing institutional investors with exposure to emerging market credit and enabling IFC to recycle capital for new high-impact projects. Analysts predict that the success of this deal will inspire similar models across other development finance institutions, paving the way for increased private capital flows to underserved regions.
