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IDB Invest Launches Landmark $1 Billion Securitization in Latin America and the Caribbean

 

  • Transaction marks a milestone for IDB Invest’s new Originate-to-Share business model. 

  • First securitization focused on Latin America and the Caribbean with MDB assets for private investors, as well as the first portfolio-level risk transfer by IDB Invest.

  • Innovative financial solution connects development assets to international investors, by securitizing a portfolio of MDB assets. 

 

Washington, D.C. – IDB Invest announced a $1 billion securitization transaction, the first of its kind for private sector investors to buy multilateral development bank (MDB) assets from Latin America and the Caribbean. This innovative financial structure seeks to create a new MDB asset class for international investors. IDB Invest partnered with Santander and Clifford Chance as key advisors.   

 

The new securitization will be unveiled today during the launch event On the Road to Originate to Share, to be held at IDB Headquarters in Washington, D.C., featuring remarks by Ilan Goldfajn, IDB President; James Scriven, CEO of IDB Invest; Ana Botín, CEO of Santander; and Alexia Latortue, U.S. Treasury Assistant Secretary for International Trade and Development.

 

The transaction, called Scaling4Impact, consists of securitizing $1 billion of IDB Invest’s portfolio, creating a tranched structure with an $870 million senior tranche; a $100 million mezzanine tranche, a portion of which was sold to international investor Newmarket Capital and the remainder insured by AXIS and AXA; and a $30 million junior tranche retained by IDB Invest. 

 

The securitized portfolio includes assets from 20 countries and 10 sectors, such as corporates, infrastructure, energy and financial institutions. The transaction will free up capital, creating up to half a billion in additional lending capacity for new development projects. Similar recent deals by IDB Invest suggest this could attract around $4 billion from institutional investors through instruments like the 144a RegS B-bond in international debt capital markets.

 

“With our new originate to share business model, our strong ties with governments and the deep synergies between our private and public sector work, we’re uniquely positioned to attract private capital,” said IDB President, Ilan Goldfajn. “Through this landmark transaction, we are connecting development assets with global investors to scale impact in Latin America and the Caribbean.” 

 

As one of the foundational steps in IDB Invest’s new originate-to-share business model, the transaction introduces a series of firsts, including the first securitization focused on Latin America and the Caribbean MDB assets for private investors, as well as the first portfolio-level risk transfer by IDB Invest.

 

“This initiative marks a major step in IDB Invest’s transition to our new originate-to-share business model, aimed at mobilizing capital and scaling impact through the private sector,” said James Scriven, CEO of IDB Invest. “We are building a new MDB asset class to crowd-in investors seeking unique impactful investment opportunities in emerging markets.”

 

This groundbreaking transaction aligns with key G20 recommendations from the Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks (CAF), including financial innovation, balance sheet optimization through private sector risk transfers, enhanced engagement with rating agencies, and leveraging the Global Emerging Markets (GEMs) database to showcase MDB asset performance to private investors.

 

“Scaling4Impact is an incredibly exciting transaction and a new pathway for investor participation in development finance,” said Molly Whitehouse, Managing Director at Newmarket Capital and portfolio manager for Newmarket’s SRT strategy. “We believe Scaling4Impact will catalyze other multilateral lending institutions to utilize the power of SRT transactions to improve their balance sheets while serving as a template for crowding in more capital from private market participants. We congratulate IDB Invest who have been terrific partners throughout this process.”

 

“AXA XL is proud to be a key risk partner in this innovative transaction,” said Scott Gunter, CEO, AXA XL. “Our involvement in Scaling4Impact shows our commitment to working with global multilateral organizations like IDB Invest, leveraging our political risk and credit expertise to drive progress and protect what matters. We look forward to continued collaboration to drive meaningful development in emerging markets.”

 

“AXIS has a long and successful history of insuring multilateral development banks across a wide range of asset classes in developing countries,” said Mark Harwood, Head of Capital Risk Solutions, AXIS.  “We are delighted and honored to be partnering with IDB Invest, together with Newmarket Capital and coinsuring alongside AXA XL, on this landmark $1 billion securitization transaction in support of IDB Invest’s mandate to promote and accelerate economic and social development across Latin America and the Caribbean.” 

 

Scaling4Impact reinforces IDB Invest’s commitment to Latin America and the Caribbean and its role as an pioneer among MDBs in connecting development assets in the region with international investors. 

 

About IDB Invest

IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $21 billion in development-related assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet its clients' needs in various sectors. Visit idbinvest.org.

 

About Newmarket 

Newmarket is an asset manager and registered investment adviser positioned at the nexus of structured solutions, impact, and innovation. We design and invest in balance sheet solutions at scale alongside the world’s largest financial institutions, customizing our structures and reference portfolios to optimize value for our partners. The Newmarket team has provided credit protection instruments since 2013, specializing in portfolios of infrastructure, large corporates, and commercial real estate loans. These investments provide risk-transfer tools that help optimize bank balance sheets. Newmarket has a long history of making impact investments, having catalyzed billions of dollars of fresh lending to urgently needed climate resiliency and development finance projects around the world. 

Our company’s namesake, Newmarket, celebrates our focus on improvement and innovation while honoring one of the oldest surviving market buildings in the United States, New Market, which is located in Philadelphia, where the company is headquartered. To learn more, please contact info@newmarketcapital.com or visit us at newmarketcapital.com.

 

About AXA XL

AXA XL, the property & casualty and specialty risk division of AXA, provides insurance and risk management products and services for mid-sized companies through to large multinationals, and reinsurance solutions to insurance companies globally. We partner with those who move the world forward. To learn more, visit axaxl.com.

 

About AXA XL INSURANCE 

AXA XL Insurance offers property, casualty, professional, financial lines, and specialty insurance solutions to mid-sized companies through to large multinationals globally. We partner with those who move the world forward. To learn more, visit axaxl.com.

 

About AXIS Capital

AXIS Capital, through its operating subsidiaries, is a global specialty underwriter and provider of insurance and reinsurance solutions. The company has shareholders’ equity of $5.7 billion at June 30, 2024, and locations in Bermuda, the United States, Europe, Singapore, and Canada. Its operating subsidiaries have been assigned a financial strength rating of "A+" ("Strong") by Standard & Poor’s and "A" ("Excellent") by A.M. Best. For more information about AXIS Capital, visit our website at axiscapital.com. Follow AXIS Capital on LinkedIn and X Corp.