IFC closes $509 million deal to bring private investors into emerging market lending

The transaction is structured as a collateralized loan obligation, or CLO, which pools loans and divides the investment into layers offering different levels of risk and potential return.

The International Finance Corporation has completed a $509 million transaction that gives institutional investors access to loans made to businesses across emerging markets. The deal is the second under the World Bank Group's Emerging Markets Securitization Program, which channels private investment into businesses and frees up IFC capital for further lending.

The transaction packages 62 IFC-originated loans across different sectors and countries into rated securities. It follows the programme's first deal in September 2025, bringing total securities issued through the two transactions to more than $1 billion and expanding a financing approach intended to support business growth and job creation.

Turning business loans into investment opportunities

The transaction is structured as a collateralized loan obligation, or CLO, which pools loans and divides the investment into layers offering different levels of risk and potential return. This gives institutional investors a familiar way to invest in a diversified portfolio of emerging market loans.

For IFC, the structure supports its originate-to-distribute strategy: the institution originates loans, then packages portions of its portfolio into securities that investors can buy. Recycling capital through these transactions expands its capacity to finance more private businesses in developing countries.

"Capital that reaches the private sector in emerging markets is capital that creates jobs," said John Gandolfo, IFC Vice President and Chief Financial Officer. Gandolfo said the transaction connects institutional investors with businesses that can expand employment and economic opportunity. The programme is intended to build a repeatable route for private capital to reach productive sectors and help narrow the development financing gap.

The second issuance builds on the first transaction's structure, adding an Aa1-rated tranche to broaden the investment options available.

Strong demand across several layers of risk

The deal was oversubscribed, meaning investor demand exceeded the amount available. Its structure includes two senior tranches of $320 million and $50 million, rated Aaa and Aa1 respectively by Moody's and sold to private investors. An $80 million mezzanine tranche is insured by a consortium of credit insurers. IFC and the UK's Foreign, Commonwealth & Development Office jointly hold the $59 million equity tranche, which carries the first-loss risk. PIMCO participated as the anchor investor, alongside L&G, Shizuoka Bank, Sona Asset Management and other institutional investors.

The insurance consortium comprises AXA XL, AXIS Capital, Everest, HDI Global, Liberty Speciality Markets and MSIG USA. Their participation provides credit protection for the mezzanine layer of the transaction. Goldman Sachs arranged the deal, Clifford Chance served as IFC's counsel, and Bank of New York Mellon acted as trustee and paying bank.

UK backing helps bring development finance to investors

Both transactions received catalytic equity investment from the UK's Foreign, Commonwealth & Development Office through MOBILIST. That backing helped establish the programme alongside IFC and supported the listing of senior notes on the London Stock Exchange.

UK Minister for Development Jenny Chapman said the investment demonstrated how new approaches to development finance could give IFC greater capacity to support the Global South. She described the approach as a move "from donor to investor," drawing on the UK's financial expertise to connect mainstream private investors with opportunities to expand development financing.

For the World Bank Group, the two issuances are part of a broader effort to build a deeper, more liquid market for emerging market credit. Offering rated securities through a repeatable structure can make these assets accessible to a wider pool of institutions, creating more opportunities to direct private investment towards businesses in developing economies.