A meeting will be held to take stock of the preparations to date for launching Global Development Bonds, and to welcome interest and involvement from those who wish to join this effort in some way. With an aim of reducing poverty in developing countries, commitment partners hope to continue building recent advances in private sector financing techniques (including securitization and collateralized debt obligations) that have had notable success in global markets and can now be adapted for developing countries.
The Global Development Bonds will provide funds for international financial institutions to distribute to local institutions, which are then able to lend to project sponsors. These bonds are partially guaranteed by entities (e.g., OPIC and/or others) that investors and the ratings agencies. This backstopping, together with other features such as diversification across countries, reduces the risks, and thus makes Global Development Bonds more attractive than ordinary placements would be.
Among the many obstacles that developing countries need to overcome in their fight against poverty are huge deficits in basic infrastructure. Good investment projects that would help correct these deficits are going unfunded currently, while global markets are awash with capital looking for favorable returns. Better investment vehicles for attracting capital to such projects (Global Development Bonds, for example) are now feasible, due partly to recent overall progress in developing countries' policies and partly to new techniques for managing the risks involved. If these new vehicles are to catch on without a lengthy delay that would be harmful for developing countries, concerted action is needed to launch several examples so that investors can see for themselves and then enable this market to take off on its own.
Some local entrepreneurs in India see an opportunity to improve a water supply system that would help farmers and urban water users. Other groups elsewhere in, say, over 20 countries see similar possibilities in roads, electricity, housing, etc. These projects would previously not have been able to get funding because their local banks would not have had enough capital or would not have been willing to take on the risks involved.
Commitment partners are seeking a wide range of partnerships to produce an effective systemic solution that brings together institutional issuers and investors, local financial institutions, and a range of other partner organizations.