World Bank Group Raises $1.5bn In Maiden IDA Bond For Poorest Nations

The International Development Association (IDA), on Tuesday launched its first bond in its nearly 60-year history, raking in $1.5bn from investors around the globe.
The triple A-rated asset and support life-changing instruments for investments in some of the most pressing development issues among the world’s poorest countries.

IDA provides technical expertise and low-cost financing for projects and programmes that boost economic growth and reduce poverty in the world’s poorest countries— from tackling conflict, fragility and violence; forced displacement; climate change; and gender inequality to promoting governance, institution building, creating jobs and supporting a strong private sector for economic transformation.

A statement by the World Bank Group noted that until now, IDA has been virtually unleveraged, building up an unparalleled equity base of US$158 billion.
In 2016, IDA shareholders agreed to transform IDA’s financing model, leveraging its strong capital base to pioneer a new model for development finance that combines donor funding with funding raised in the capital markets. IDA’s borrowing program will enable IDA to significantly scale up its support toward achieving the Sustainable Development Goals, while offering investors an efficient way to contribute to global development.

The statement quoted World Bank Group President Jim Yong Kim as saying the “bond issue will allow IDA to tap into the power of capital markets to tackle some of the world’s biggest challenges and help millions lift themselves out of poverty.
“While it is a new bond issuer, IDA is an established institution, with an almost 60-year track record as the leading source of development finance and expertise for some of the fastest growing economies in the world. As a borrower, it leverages its unrivaled capital position – the largest equity of any multilateral development bank – and decades of strong donor support, a solid track record of repayments, and prudent financial management.”

World Bank Group Managing Director and Chief Financial Officer, Joaquim Levy described the inaugural bond issuance as “a landmark in mobilizing capital for development finance. By leveraging the balance sheet and the significant achievements of IDA for the first time, we are delivering shareholders value for money, opening new investment opportunities in the fixed income space and, most importantly, scaling up IDA’s ability to have an impact where it makes the greatest difference.”

For the group’s Vice President and Treasurer Arunma Oteh, “IDA received a resounding response from the market for its debut issuance. Investors globally seized the unique opportunity to be the first to invest in IDA’s triple-A rated bond and make a positive impact in the lives of hundreds of millions of people around the globe. I want to thank investors, lead managers and all the bankers for their personal engagement and commitment to making IDA debut such a fantastic success. As we grow IDA’s borrowing program, we will continue to ensure a strong financial condition and prudent financial and operational management for IDA. We will also continue to put to work for IDA the World Bank Treasury’s 70-year track record of innovation in connecting capital markets with development.”

World Bank Vice President for Development Finance Axel van Trotsenburg said: “Three years ago, the international community agreed that business as usual is no longer enough for development finance, and committed to leveraging aid balance sheets, scaling-up, and raising more capital to help the poorest countries achieve Sustainable Development Goals (SDGs) by 2030. IDA’s historic entry into the global capital markets, with its first issuance of an IDA bond today, represents a transformational shift responding to shareholder ambitions, development needs, and investor requirements.

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