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Capital Markets

World Bank bond is a new chapter in non-profit funding

A $100 million World Bank bond arranged in early March by Citi crowded in funding from wealthy individuals as well as institutions for the first time. When it comes to impact investing, this is just the start.

A Syrian refugee student takes part in a washing hands activity as part of an awareness campaign about coronavirus initiated by OXFAM and UNICEF at Al Zaatari refugee camp

Giving just got a little more financially sophisticated.

To the incurious eye, the bond issued by the World Bank on March 4 was a standard issue financial instrument: a $100 million 1.291% March 2026 capital-at-risk note.

But look a little closer, and you see a fascinating new tangle of financial wiring at work.

First, we’ll examine the proceeds.

Half of the unrated five-year bond will be used by the World Bank to tackle challenges presented by Covid-19 and the need to build a more sustainable future. The other $50 million will be placed in the hands of Unicef, to support the UN agency’s pandemic response programme to help underprivileged children in 18 emerging markets.

Second, let us look at the idea itself.

The bond is novel in many ways. Citi acted as sole structurer and arranger for a complex, collective and coordinated affair.

Its real start date was the spring of 2020. That is when Unicef, in search of fresh sources of funds, reached out for help to the World Bank, which decided to deploy its capital-at-risk notes programme, triggered when it issues riskier instruments such as pandemic bonds or catastrophe bonds.

Citi then entered the fray and put members of its debt capital markets and sustainable investing teams to work and came up with an instrument attractive to individuals and institutions.


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