Investors back IDA’s second Sterling market transaction

22 February 2021

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Bringing positive change for the poorest

Overseen by 173 shareholder nations, the International Development Association (IDA), a part of the World Bank, is one of the largest sources of assistance for the world’s 74 poorest countries and is the single largest source of donor funds for basic social services in these countries. For over sixty years, the organisation has focused on financing sustainable development projects and achieving positive impact.
IDA – which complements the World Bank’s original lending arm, the International Bank for Reconstruction and Development (IBRD) – aims to reduce poverty in those countries by offering zero to low-interest loans (called “credits”) and grants for programmes that boost economic growth, reduce inequalities, and improve people’s living conditions.
As well as IDA’s operational work, its analytical studies support the design of policies to reduce poverty. As such, IDA also advises governments on ways to broaden the base of economic growth and protect the poor from economic shocks.

IDA attracts diverse group of investors

IDA accessed the capital markets for the first time in 2018 and since then, has focused on building its investor base and implementing its funding strategy, offering high-quality liquid products in various currencies. Following their inaugural GBP issuance in 2020, IDA selected NatWest Markets as one of their lead managers for their second transaction in the Sterling market, a 7-year bond. Appealing to a broad investor base, IDA raised £1billion and achieved a coupon of 0.375%. 
The transaction attracted over 30 orders from a globally diverse group of high quality Sterling investors: central banks and official institutions took 49% of the orderbook, closely followed by banks, bank treasuries and corporates taking 40%, while the rest, 11%, went to asset managers, pension funds and insurance firms. 

Steadfast in the fight against poverty

IDA bonds are aligned with the Sustainability Bond Guidelines published by the International Capital Markets Association (ICMA).  The selection process for projects eligible to be funded through the net proceeds of the bonds follows IDA’s environmental and social framework, which includes a range of development activities, such as primary education, basic health services, clean water and sanitation, agriculture, business climate improvements, infrastructure, and institutional reforms. These interventions pave the way toward equality, economic growth, job creation, higher incomes, and better living conditions.

Ida’s development areas:

Helping to advance IDA’s mission to eradicate extreme poverty

Commenting on the deal Kerr Finlayson, Managing Director, Head of Frequent Borrower Group Syndicate, NatWest Markets, said: “NatWest Markets is honoured to joint lead manage IDA’s second Sterling issuance. Raising £1billion in a 7-year maturity is a difficult feat for seasoned Sterling issuers. For IDA to accomplish this on their second outing is testament to the growing appeal of its high-quality credit. This issuance reflects NatWest’s commitment and focus on supporting sustainable development, and we are proud to help IDA advance its mission to eradicate extreme poverty in a sustainable manner.”
Jingdong Hua, Vice President and Treasurer, World Bank, stated: “We thank the investors for joining this transaction, which further demonstrates IDA’s growing track record in the bond markets. A larger and steady capital market programme supports IDA’s efforts to provide one of the largest sources of funding to the world’s poorest countries, which helps reduce poverty and deliver basic social services as they respond to the COVID-19 pandemic.”
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