Originate-to-Distribute Models

MDBs agree on a standardized approach to their underwriting criteria with a view to bundle their loans for sale to the private market, removing a significant portion of the loans from their books (likely need to retain a share for alignment of interest), mobilizing private capital, and sharing the risk between financial actors.

IDB and AfDB have announced efforts to adopt broad originate to distribute (OtD) models, and the World Bank is exploring OtD through a new group bringing together private sector and institutional investors. OtD, along with securitization, have been explored as ways to provide more local currency financing, increase the pace of MDB origination, and mobilize private capital for climate and development projects. While there is a clear need for standardization on the securitization-purchasing side, it is still unclear how the standardization would work on the origination size to support effective securitization.