World Bank sold $510 million in bonds backed by loans to 57 companies in emerging markets.

The World Bank has sold $510 million in bonds backed by loans it previously issued to companies operating in emerging economies, according to ￰0￱ transaction is the Bank’s first use of a collateralized loan obligation, a structure common on Wall Street but until now, unused by the development ￰1￱ deal targets institutional investors hungry for yield and pushes private capital into markets where businesses typically face serious financing ￰2￱ bonds are backed by debt issued to 57 different companies across Asia, South America, and Eastern Europe. That’s according to Yinni Li, a credit analyst at Moody’s Ratings, who reviewed the ￰3￱ involved span sectors like telecommunications, food, and beverage ￰4￱ idea is to take loan exposures from the World Bank’s book, package them into securities, and sell them ￰5￱ would supposedly free up space on the Bank’s balance sheet to issue new loans while passing credit risk to investors.

Moody’s rates $320 million piece Aaa, Goldman structures the deal The largest slice of the bonds, $320 million, was rated Aaa by Moody’s, the agency’s highest ￰6￱ portion pays an interest rate of 1.3 percentage points over a benchmark tied to market rates. Moody’s did not assess the creditworthiness of the underlying loans themselves, only the senior ￰7￱ Bank kept the structure standard: risk is carved into tranches, the safest at the top, and more volatile risk ￰8￱ lets cautious investors grab high-rated debt while others take bigger bets on the lower-rated ￰9￱ Sachs worked with the World Bank on the design and execution of the ￰10￱ World Bank hasn’t done this before, but Wall Street ￰11￱ types of deals were heavily used before the 2008 financial ￰12￱ then, toxic mortgages were bundled into seemingly safe securities, many with top ratings, until the entire structure ￰13￱ that blow-up, securitization became a dirty word for a ￰14￱ in the last few years, it has come roaring ￰15￱ is now over $1.3 trillion in global CLO issuance.

A growing slice of that belongs to private credit CLOs, which are gaining traction ￰16￱ investors are also jumping in, with exchange-traded funds (ETFs) that buy ￰17￱ pulling in serious ￰18￱ of earlier this month, ETFs linked to these types of loans managed over $34 billion in ￰19￱ Bank plans more deals to push risk into private hands This deal isn’t just a one-off ￰20￱ World Bank is actively building out an entire emerging-market securitization ￰21￱ was outlined in a November presentation, where it said more transactions were ￰22￱ Bank wants to expand its lending by taking some of its old loans off its books and handing the exposure to private institutions.

That’s a key step in helping it lend more without ballooning its own balance ￰23￱ Banga, president of the World Bank, told Bloomberg last month, “It’s the first time the World Bank has done this.” He confirmed that Goldman Sachs helped structure the ￰24￱ said it was just one part of a broader ￰25￱ pieces include debt-for-development swaps, which are also in play as tools to scale up investment into poorer nations. It’s not like no one has done this ￰26￱ issuers have securitized emerging-market loans, though deals remain ￰27￱ 2023, Bayfront Infrastructure Capital, based in Singapore, issued a $410 million CLO backed by revenues from project loans and ￰28￱ deal covered regions including the Asia-Pacific, the Middle East, the Americas, and ￰29￱ the World Bank’s deal, it relied on turning illiquid debt tied to infrastructure and development into investable products for global ￰30￱ Difference Wire helps crypto brands break through and dominate headlines fast