IDB Invest, the Inter-American Development Bank’s private sector arm, has announced a new deal that will free up $500 million in new lending by offloading risk to investors.
The institution hopes the deal will pave the way for a new asset class of multilateral development bank investments.
The new lending is possible thanks to a securitization transaction that IDB Invest put together called Scaling4Impact. Through the deal, IDB Invest took $1 billion of its investments and pooled them together into a financial vehicle with different levels, or tranches, that appeal to different types of investors based on their risk appetite and return needs.