Developing Financial Tools for Global Impact

Through global capital markets, IBRD has been mobilizing finance for our client countries for over 70 years, raising nearly $900 billion since its first bond in 1947.

Through global capital markets, IBRD has been mobilizing finance for our client countries for over 70 years, raising nearly $900 billion since its first bond in 1947. During fiscal 2019, IBRD leveraged $16 billion in paid-in capital from its shareholders to fund over $120 billion in projects and programs that help countries address development priorities around the world. We leverage IBRD’s triple-A rating to cost effectively raise $50–$60 billion annually to support the Bank’s sustainable development mandate, develop financial tools and instruments that advance global development priorities, and help clients manage risk and build resilience. In fiscal 2018, IDA entered the capital markets for the first time with an inaugural $1.5 billion benchmark bond. Total orders for the IDA bond reached $4.6 billion from around the world. This has enabled IDA to significantly scale up its support toward the Sustainable Development Goals (SDGs), while offering investors an efficient way to contribute to global development.

Promoting capital market instruments for global development 

The Bank’s capital market instruments give the private sector the opportunity to engage in global development priorities. In fiscal 2019, these included an Indonesian rupiah–denominated five-year bond to promote women’s empowerment in rural areas and a Swedish krona (SKr) 2.5 billion five-year bond to raise awareness for sustainable cities and communities. In December 2018, the Bank priced new SDG index-linked bonds for retail investors in Hong Kong SAR, China, and Singapore, with returns linked to an equity index that tracks the performance of companies advancing the goals, including on climate, gender, and health. We are also seeking to harness emerging technologies for development. In August 2018, for example, we issued the world’s first global blockchain bond, bond-i, in partnership with the Commonwealth Bank of Australia and Microsoft.

We also issue green bonds, which tap capital markets to support climate-related projects and shift investor focus to the environmental, social, and governance commitments of issuers. We issued the world’s first labeled green bond in 2008, and our green bonds have raised the equivalent of $13 billion through more than 150 transactions in 20 currencies. In November 2018, we marked the 10-year anniversary of the first green bond with three major benchmark issuances in euros, Australian dollars, and U.S. dollars, raising $1.3 billion equivalent.

The Bank also helps countries build green bond markets. This work helps clients demonstrate leadership on sustainability and climate action, while offering investors an opportunity to support development solutions that address climate change. In 2009, California became the sole investor in our first U.S. dollar–denominated green bond. We celebrated the long-standing partnership with a new issuance in October 2018, for a total of $1.5 billion over 10 years.  In September 2018, the Bank also issued the first green bond guide for issuers—the Green Bond Proceeds Management and Reporting Guide—providing guidance to public sector issuers and furthering global thought leadership.

In August 2018, we launched an initiative to highlight the critical role of water and ocean resources. A range of institutional and retail investors globally have supported the effort by buying World Bank Sustainable Development Bonds, totaling 23 bonds in 10 currencies to date. In November 2018, IBRD raised $660 million in bonds to raise awareness for the SDGs for clean water and sanitation (SDG 6) and life below water (SDG 14). 

In May 2019, we issued a 13-year SKr 500 million sustainable development bond that highlights the urgency of addressing water and ocean pollution, particularly plastic waste in oceans.

We also helped the Seychelles develop the world’s first sovereign blue bond to support sustainable marine and fisheries projects; this launched in October 2018. Proceeds will support expansion of marine protected areas, better governance of key fisheries, and development of the country’s blue economy. As one of the world’s biodiversity hotspots, the Seychelles is balancing its needs to develop economically and protect its natural environment.

We are furthering the transition to sustainable capital markets by deepening our partnership with Japan’s Government Pension Investment Fund. As part of this, the Bank’s Treasury convened the first-ever roundtable on environmental, social, and governance issues to promote open and productive dialogue between institutional investors and sovereign bond issuers.

Helping clients manage public debt  

Effective, strategic, and efficient public debt management is important for financial stability and sustainable fiscal policy.  It requires sound practices, including to ensure that public debt does not undermine development objectives.

In fiscal 2019, the Bank worked with over 50 sovereign and subnational debt management offices to help governments build institutional capacity for public debt management. These advisory services reached more than 1,000 practitioners through webinars, workshops and forums, online communication and virtual peer groups, and in-person meetings to build and manage long-term relationships among counterparts.

We are increasingly adapting our services and offerings as developing countries’ debt portfolios become more complex. We provide technical assistance to countries designing and implementing debt management strategies, assessing debt sustainability, and developing their local currency markets.

To meet countries’ growing needs, this year the World Bank Treasury developed the first-ever workshop on sovereign balance sheet risk management, published working papers on sovereign assets and liabilities, and designed and deployed the first analytical tool specifically for countries to manage cash and cashflow projections.

The Reserves Advisory and Management Program is our rapidly growing platform for delivering demand-driven capacity building and asset management services to official sector asset managers in developing countries and international institutions. It helps central banks, pension funds, and sovereign wealth funds build human capital, strengthen governance and operations, and deliver returns on financial resources consistent with their mandates and risk parameters. Demand for the program continues to grow; it now serves 70 institutions, including many in low-income countries and fragile and conflict-affected situations.     

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