World Bank fund for poorest countries issues $1.5bn bond

WASHINGTON: The World Bank fund dedicated to helping the world's poorest countries on Tuesday announced it has raised $1.5 billion in its first-ever global bond issue, which enjoyed huge demand from investors.

The International Development Association (IDA) issued a five-year AAA-rated bond which had nearly five times more demand than the amount initially offered for sale, the World Bank said in a statement.

"Today's bond issue will allow IDA to tap into the power of capital markets to tackle some of the world's biggest challenges and help millions lift themselves out of poverty," World Bank President Jim Yong Kim said in a statement.

Over 40 percent of the bonds went to central banks, while a quarter went to banks and another quarter to pension funds. The funds will be used to finance sustainable development projects.

IDA, which provides very low cost funding to the poorest countries, previously relied on regular government contributions for its work. But in 2016 shareholders agreed to turn to investors to raise funds against its huge $158 billion in capital.

Annual commitments have averaged about $18 billion over the last three years in 113 countries.

"While it is a new bond issuer, IDA is an established institution, with an almost 60-year track record as the leading source of development finance and expertise for some of the fastest growing economies in the world," Kim said.