The World Bank president has said that the group's corporate lending arm will start regularly offloading slices of its loans to private investors, after its maiden securitisation packaged half a billion dollars of debt.

The International Finance Corporation sold tranches of risk on a $500mn portfolio of loans to companies in emerging markets this month, as a test of a plan to boost the World Bank's firepower with private investment.

Ajay Banga told the Financial Times that while he could not yet predict how large these deals might become, "I have every intention of doing this on a regular cadence" that would keep "large pools of private capital" such as pension funds and insurers coming back.

Many of the World Bank's biggest shareholders including the US and UK have slashed aid funding in the past year, piling pressure on the bank to make its balance sheet stretch further before asking donors for capital.

Banga, a former Mastercard chief executive, said that the IFC's first collateralised loan obligation was part of other initiatives to unlock private capital, which include making more of the IFC's loans in local currencies and providing more guarantees on investments.

"The [main] purpose is not to reduce the risk on my balance sheet and free up capital," he said. "The greater part of the purpose is to encourage further private sector participation in these markets . . . the amount of private capital flowing into emerging markets has not shown the promise of billions to trillions that people said years ago."

Pension funds and other big institutional investors say that on their own they struggle to find infrastructure and project loans in developing nations that are large and diverse enough to be worthwhile, which has spawned interest in development banks aggregating these loans.

Multilateral development banks often sell international bonds to bolster their capital but have rarely tapped the market for CLOs, a common vehicle used by commercial lenders to tranche out credit risk.

Loans to governments are seen as difficult to slice up for private investors in this way, because top-tier development banks such as the World Bank usually benefit from preferred creditor status on these debts. Lenders would be wary of compromising this status by involving private investors.

The IFC transaction was about two years in development and used existing US dollar, floating-rate corporate loans as backing, people familiar with the matter said.

The most senior tranches on the deal were set to pay a coupon of 1.3 percentage points on top of the three-month Secured Overnight Financing Rate -- a benchmark US dollar funding rate, currently 4.37 per cent -- and drew interest from banks, asset managers and insurance groups, they added.

The deal includes loans to 57 borrowers, with Turkey, Mexico, Brazil, Bangladesh and Egypt making up just under 42 per cent of the national mix of the portfolio, according to a presale report by Moody's.

The Asian Infrastructure Investment Bank has also backed a bigger market for emerging-market securitisation through a stake in Bayfront, a venture with Singapore's Clifford Capital that regularly issues infrastructure asset-backed securities.

It would be difficult for the World Bank to similarly securitise lending to the public sector by the International Bank for Reconstruction and Development and the International Development Association, its arms for lending to middle-income and poor countries respectively, Banga said.

The bank could in future potentially pool such loans with other development banks if deal terms could be standardised, he said.

This use of financial engineering is not an "either/or" that excludes raising more capital, and the IDA in particular won donor commitments of $24bn for its latest fundraising last year, Banga added.

But the bank also has to be realistic as big western donors face competing demands on their budgets from ageing populations, defence spending and other needs, he said. "I'm not shy of asking for more capital, but I am not someone who believes hope is a strategy."

World Bank seeks to boost firepower by offloading loan risk to investors