Banks Move Development Risk to Private Investors
JPMorgan and HSBC are building securitization businesses that let development banks shift credit risk to outside investors.
Updated on Nov. 5, 2026 in Investing
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JPMorgan and HSBC are developing a new line of business arranging securitizations for development banks, which let those lenders offload credit risk to private investors. In early October, 30 multilateral development banks and development finance institutions pledged to make synthetic risk transfers and collateralized loan obligations a standard funding tool.
Why it matters
Multilateral development banks hold around USD 1.5 trillion in development assets combined, and the push comes as shareholder governments provide less support. Moving credit risk to private investors could let these lenders keep financing projects without drawing down their own capital.
Multilateral development banks hold roughly USD 1.5 trillion in combined assets, and the EBRD's inaugural synthetic securitization was sized at EUR 1 billion. Volume growth is expected to be capped by the supply of bankable projects and the depth of investor demand, and the reporting does not quantify either.
The players
JPMorgan
JPMorgan is a major US investment bank that is building a new line of business arranging securitizations for development banks.
HSBC
HSBC is a global banking group headquartered in London that is developing securitization services for development lenders and has participated in Miga-backed trade loan deals in Egypt.
European Bank for Reconstruction and Development
The EBRD is a multilateral development bank that completed its inaugural EUR 1 billion synthetic securitization and a risk-sharing facility with an Egyptian bank.
Multilateral Investment Guarantee Agency
Miga is the World Bank Group member that provides political risk insurance and guarantees, and it wrapped USD 313 million of trade loans to Egypt's National Bank of Egypt.
The details
A development bank pays an outside investor to absorb part of the credit losses on a loan portfolio, and regulators and rating agencies allow the bank to hold less capital against those loans so it can lend the difference again. Miga wrapped USD 313 million of HSBC and Standard Chartered trade loans to the National Bank of Egypt in March, and the EBRD's first risk-sharing facility with an Egyptian bank, USD 25 million with Emirates NBD Egypt, closed in June 2025.
Timeline
March 2026: Miga wrapped USD 313 million of trade loans to the National Bank of Egypt.
May 2026: PGGM took part in the mezzanine tranche of the EBRD's inaugural EUR 1 billion synthetic securitization.
Early October 2026: 30 multilateral development banks and development finance institutions pledged to standardize synthetic risk transfers.
9 November 2026: COP31 opens in Antalya with climate finance on the agenda.
Market Dynamics
The October pledge by 30 multilateral development banks extends the synthetic risk transfer model the EBRD used in its inaugural EUR 1 billion securitization into a coordinated standard funding practice. It marks a shift from one-off deals toward institutionalized credit-risk transfer as shareholder support for development lending shrinks.
Investors gain exposure to credit risk on development loan portfolios through securitizations that these banks are standardizing. Retail investors typically reach these exposures only indirectly, through funds or institutional vehicles, so the practical effect on personal portfolios is limited for now.
The takeaway
Credit-risk transfer is becoming a standard tool for development lenders, which could expand the pool of private capital funding global projects. Watch for published loss data from these banks, since it will determine how much investor appetite grows.
Further reading
For broader context on how these structures work for individual investors, see the Investing section.
Source note: This article includes information reported by EnterpriseAM Egypt.
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