The World Bank Group, through its private sector arm, the International Finance Corporation (IFC), has completed its first-ever securitization transaction, a $510 million collateralized loan obligation (CLO), in a move that could reshape how private capital flows into emerging markets.
The landmark deal, which has been in preparation for two years, repackages IFC loans into rated securities that meet institutional investment standards. The approach effectively creates a new asset class for emerging markets, paving the way for global investors such as pension funds, insurers, and asset managers to participate at scale.
“This is step one in an originate-to-distribute strategy that holds significant potential to attract private capital at scale,” said World Bank Group President Ajay Banga. “It also frees up our balance sheet so we can support more countries and more private-sector players. The opportunity and the need are much larger—and so is our ambition.”
Strong Market Interest
The transaction, listed on the London Stock Exchange, attracted strong investor demand. It included 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.
Analysts say the structure offers investors exposure to emerging market credit while spreading risk in a format familiar to global financial markets. For developing countries, it means greater access to funding for private-sector projects, infrastructure, and job creation.
Unlocking Scale for Development
The initiative is part of a broader World Bank strategy to build an “originate-to-distribute” model, enabling the institution to recycle its own capital while mobilizing far larger sums from the private sector. The Private Sector Investment Lab, launched in June 2023, identified this model as key to breaking down barriers to private sector financing in developing economies.
By establishing a scalable, replicable framework, the IFC plans to issue similar transactions regularly, creating a steady pipeline of investable securities backed by emerging market assets.
Implications for Africa and Beyond
For countries like Ghana and others across Africa, this innovation could be pivotal. Limited access to long-term, affordable capital has long constrained investment in energy, infrastructure, and agribusiness. With institutional investors now able to commit capital through a tested market instrument, governments and businesses may benefit from expanded financing options that are both larger in scale and more sustainable.
Market observers believe this could catalyze private investment flows into regions that have traditionally struggled to attract global capital, offering not just funding but also opportunities for job creation and economic transformation.
