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Goldman Sachs Readies First-of-Its-Kind CLO for World Bank’s IFC Backed by Emerging-Market Loans

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Reporting: Diana Bravo, Hugh Minch
The International Finance Corporation, the investment arm of the World Bank, is preparing to issue a first-of-its-kind CLO backed by emerging-market debt, according to market sources, who told Octus that the advisor is working with arranger Goldman Sachs on the deal.

The transaction is understood to be part of the IFC’s Warehouse-Enabled Securitization Program, or WESP, which is an effort to make World Bank Group loans available to institutional investors. IFC representatives working on the strategy are hopeful that other issuers will bring similar deals to the CLO market, according to marketing documents.

“The aim is to make it easier for institutional investors to invest in developing countries,” said representatives for the World Bank’s development committee in its update to governors published in October 2024. “IFC will share the technology and knowledge from the Warehouse-Enabled Securitization Program so that other originators – including Multilateral Development Banks and Development Finance Institutions – can join efforts to attract private investment, create jobs and improve the lives of the poorest.”

According to the IFC, the WESP emerging-market CLO transaction will be structured similarly to a typical CLO, using IFC-originated project and corporate finance loans from multiple countries, rather than leveraged loans.

The loans in the portfolio will carry credit estimates instead of a credit rating from an agency, similar to the requirements on middle-market CLO issuers.

Additionally, the IFC has said that it will remain the lender of record for the loans in the portfolio, and retain its own account risk of at least 25% per loan before selling the loans into a special-purpose vehicle for issuance into the CLO market.

Market sources told Octus that the portfolio would likely consist of loans to Latin American and African entities.

Representatives from Goldman Sachs and the IFC declined to comment.