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”.