MICROCAPITAL BRIEF: IFC Issues $2b in Bonds for Climate-focused, Infrastructure, Women-entrepreneurship Projects in Developing Countries

The World Bank Group’s International Finance Corporation (IFC) recently raised USD 2 billion via a bond issue to finance projects in developing countries that are focused on mitigating climate change, developing infrastructure, increasing opportunities for women entrepreneurs, and expanding financial resources to small and medium-sized enterprises (SMEs). The portions of funding allocated to each category have not been announced.

IFC sold the bonds in units of USD 1,000, each with an annual coupon rate of 2.875 percent, a yield of 2.978 percent and a term of five years. Orders for the bond issue totaled USD 3.9 billion, including 61 percent made by central banks, 33 percent by private-sector banks and 6 percent by asset management companies. In terms of geographic region, 39 percent of the bond orders came from investors in the Asia-Pacific region; 38 percent from those in the Americas and; 23 percent from Africa, Europe and the Middle East.

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. IFC has 184 member countries, and it reports total assets of USD 93 billion as of June 2017. During the year ending that month, it disbursed a total of USD 10 billion and earned return on assets of 1.6 percent and return on equity of of 5.9 percent.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2018, it has 189 member nations. The group encompasses (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) IFC; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2017, the World Bank Group disbursed a total of USD 44 billion.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/IFCExt/Pressroom/IFCPressRoom.nsf/0/FDCAFAC13350D968852582D40073B35F

IFC global bond program
https://www.ifc.org/wps/wcm/connect/a7e479804fa54e08ab3fef0098cb14b9/070228_IFC_Base_Prospectus.pdf?MOD=AJPERES

MicroCapital Brief; July 20, 2018; IFC, Azerbaijan to Expand Digital Financial Services in Nakhchivan Autonomous Republic with Funding from Switzerland’s SECO
https://www.microcapital.org/microcapital-brief-ifc-azerbaijan-to-expand-digital-financial-services-in-nakhchivan-autonomous-republic-with-funding-from-switzerlands-seco/

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