World Bank’s IDA Launches Discount Notes to Expand US Funding for Jobs

The program gives IDA ongoing access to investors looking for high-quality, short-term investments, including U.S. states and cities, bank treasuries and corporations.

The International Development Association (IDA) has launched a Discount Notes Program and completed its first issuance, opening a new source of short-term funding in the United States. The World Bank Group institution, rated Aaa/AAA, will use the program to access the country's deep and liquid money markets and bring more investors into its work to create jobs and reduce poverty in member countries.

The State of Illinois was among the first buyers, with participation from other U.S. public sector investors, state and municipal treasuries, and corporate funds. For IDA, the launch adds a flexible way to raise money and could reduce financing costs over time, leaving more resources available for countries' development needs.

A New Route to US Investors

The program gives IDA ongoing access to investors looking for high-quality, short-term investments, including U.S. states and cities, bank treasuries and corporations. Its first issuances mark the start of what IDA expects will become a broader institutional investor base in the short-term funding and money markets.

Discount notes expand the range of investments through which these institutions can support IDA's work. The program also gives IDA a continuous source of short-term funding, adding flexibility to the way it raises money in capital markets.

Nine primary dealers will support the placement of the notes: Academy Securities, Barclays Capital, CastleOak Securities, FHN Financial Capital Markets, Jefferies, Mizuho Securities USA, Siebert Williams Shank & Co., UBS Securities, and Wells Fargo Securities.

Lower Funding Costs Could Support More Development

Jorge Familiar, Vice President and Treasurer of the World Bank Group, described the launch as another important step in IDA's development as a capital markets issuer. He said broader access to U.S. investors and a flexible, continuous source of short-term funding could help lower IDA's financing costs over time. Those savings matter because money spent on funding costs is money that cannot go towards financing countries' development priorities.

"Every dollar saved can support more financing for countries as they invest in jobs, infrastructure, resilience, health, education and economic opportunity," Familiar said. The potential benefit reaches beyond the transactions themselves: a lower cost of raising funds could allow IDA to make its resources go further in the countries it supports.

US Treasury and Congress Helped Clear the Path

The launch followed efforts by the U.S. Treasury and bipartisan support in the U.S. Congress to advance the legislation needed to make the program possible. House Financial Services Committee Ranking Member Maxine Waters and her staff worked over many years to move that legislation forward. Committee Chairman French Hill provided leadership that helped secure its final passage through the Senate. That legislative work created the opening for IDA to establish the program and reach investors through this part of the U.S. market.

Federal Reserve Infrastructure Supports the Notes

The Federal Reserve System supported the creation of the operational infrastructure behind the program, providing the arrangements needed to issue and settle the notes. IDA Discount Notes are exempted securities under U.S. federal securities laws and are issued and settled through Fedwire, the Federal Reserve Banks' settlement system.

The arrangement follows the approach used for short-term notes issued by two other World Bank Group institutions, the International Bank for Reconstruction and Development and the International Finance Corporation. The Federal Reserve Bank of New York serves as fiscal agent for the program, supporting the infrastructure through which IDA can maintain access to short-term funding.