In a bid to ramp up lending efforts amidst mounting pressures, the World Bank eyes a debut hybrid note issuance of up to $1 billion this year, as disclosed by a senior executive to Reuters.
The G20, comprising major economies, urges multilateral lenders to innovate financing strategies, including hybrid structures, to bolster balance sheets and amplify funding for developing nations, tackling crises like climate change.
Following the African Development Bank’s (AfDB) pioneering sale of hybrid capital notes in January, the World Bank gears up to follow suit, aiming to pioneer this financing model further, as per a Reuters report.
George Richardson, director at the World Bank Treasury, expressed the institution’s endeavor towards a potential pilot transaction this year, highlighting conversations with investors and vigilant market monitoring.
Assessing the potential ratings of this innovative instrument, Richardson emphasizes the World Bank’s confidence in the creditworthiness of multilateral development banks vis-à-vis commercial entities, anticipating ratings agency methodologies to reflect this distinction.
Moody’s assigned an AA3 rating to AfDB’s hybrid issuance, trading below its debut value, underscoring the evolving landscape of hybrid financing in the capital markets.
