Sep 09, 2020
I can’t remember a time in my life when a single event has mobilized the entire world, with health care workers, governments, the private sector and multilateral development banks all focused on the same problem.

Each organization, each sector has a role to play – including capital markets. But how exactly can bond issuers and investors help?

The pandemic has cost lives and disrupted livelihoods on an unimaginable scale. As governments begin to slowly reopen their economies and societies, the effects of the crisis will linger, especially for poor and vulnerable people.

Countries’ financing needs are rising dramatically for both the short and medium term, first to tackle the health emergency and then to start working toward a sustainable recovery.  Many developing countries rely heavily on revenue sources such as remittances, commodity exports, and tourism and are likely to be disproportionately affected by an anticipated global recession. Tax revenues are falling as well, while these countries’ access to financial markets will be sharply curtailed.

Even before the crisis, capital markets were critical for strengthening outcomes for countries and their people. As access to these markets deteriorates for many, the multilateral development banks (MDBs) provide an essential service. These institutions maintain long-term country engagements and can act swiftly to make funds available. MDBs can be one of the few resources countries can tap into, especially during market volatility.

As the pandemic continues to unfold, the World Bank Group is acting fast and decisively to help countries respond and get their development progress back on track:  we have pledged to make available up to $160bn over 15 months. We are assisting over 100 countries to set up emergency health operations, protect households, save jobs and businesses, and get money to people most in need. Our assistance will also include support to address the medium- to long-term social and economic repercussions of the pandemic.

We are also collaborating with other MDBs and bilateral agencies to increase co-financing for operations so projects can quickly expand, and our partner institutions have also made commitments of between $70 and $80bn.

The International Bank for Reconstruction and Development (IBRD), the original member of the World Bank Group, is one of the largest global bond issuers, offering safe, liquid, and high-quality investments to direct global savings to critical use. It has been pioneering capital markets for over 70 years, and the franchise we have created provides a platform for innovation and leadership. We use the triple-A-rated credit quality of IBRD and, recently, the International Development Association (our fund for the poorest countries) to build and deepen capital markets and scale up impact as we raise awareness of global issues such as gender equality, access to clean water and ocean resources, food loss and waste, and health and nutrition. Our dialogue with investors, transparency on how we use bond proceeds, and engagement on global issues are particularly important now.

Over two days in April, IBRD raised $15bn from global investors. This included the largest-ever US dollar-denominated bond to be issued by a supranational, as well as benchmark issuances in British pound, Euro, and Swedish krone through our Sustainable Development Bonds. We have since followed up with another $4bn benchmark issuance.

Our ability to tap capital markets during difficult times demonstrates the interest investors have in supporting sustainable programs that strengthen countries’ capacities to fight the pandemic. 

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