World Bank Issues $510 Million in CLO Bonds Targeting Emerging Markets

The World Bank has launched a $510 million collateralized loan obligation (CLO), marking its first foray into a financial structure long favored by Wall Street but previously untapped by the development lender. The bonds are backed by loans to 57 companies across emerging markets in Asia, South America, and Eastern Europe, spanning sectors like telecommunications and food production.

Institutional investors hungry for yield are the primary target, with the deal designed to channel private capital into regions where businesses often struggle to secure financing. Moody’s Ratings assigned a top-tier Aaa grade to the $320 million senior tranche, which offers a 1.3 percentage-point spread over a benchmark rate. Goldman Sachs structured the transaction.

The MOVE allows the World Bank to free up balance sheet capacity for new lending while transferring credit risk to investors. The CLO follows a conventional tranche structure, prioritizing safety for risk-averse buyers while offering higher-risk, higher-reward segments to speculative players.