Hybrid and True-Sale transactions by the Banque Ouest Africaine de Développement (BOAD)

BOAD’s securitisation programme demonstrates how MDBs can innovate within regional regulatory frameworks to mobilise private capital, enhance portfolio quality, and deepen local financial markets. Its hybrid structure offers a scalable model for other issuers seeking rapid execution and broad investor participation in emerging markets.

The Challenge

The Banque Ouest Africaine de Développement (BOAD) needed to expand its financing capacity for development projects across the West African Economic and Monetary Union. BOAD views securitisation issuance as a long-term strategy to diversify its traditional source of funding, increase its funding footprint by 50% by adopting an originate-to-distribute model, and develop West African capital markets.

The Approach

BOAD launched one of the first MDB securitisation programmes in West Africa, using a hybrid structure that combined elements of synthetic securitisation and true-sale CLOs. Central to this was the creation of a Fonds Commun de Titrisation de Créances (FCTC), a common securitisation fund structured under UEMOA’s regulatory framework, which was specifically developed for the first issuance under BOAD’s programme.

BOAD’s hybrid securitisation is structurally distinct from AfDB’s R2R and IDB Invest’s Scaling4Impact transactions. It had features of both a synthetic securitisation and a true-sale CLO:

• Synthetic – BOAD was not comfortable selling their loans fully off-balance sheet and needed to be the lender of record to retain preferred creditor status for a credit uplift on the portfolio. Therefore, the principal and interest were synthetically sold to the SPV using pass-through notes linked to the underlying collateral. These are similar to a form of credit default swap.
• True-sale – The SPV then issued securities, which were listed, similarly to a CLO.

In the inaugural 2023 transaction, BOAD retained loan ownership while transferring credit risk via pass-through notes—preserving its lender-of-record status and benefiting from a 3-notch credit uplift. The SPV issued listed securities backed by sovereign loans from five West African countries. The structure included a 99% senior tranche (rated AAA locally) and a 1% junior tranche retained by BOAD, supported by a 5% cash reserve and a liquidity facility from NSIA Côte d’Ivoire.

In 2024, BOAD followed up with DOLI-P, a XOF 160 billion transaction featuring three tranches (75% senior, 18% mezzanine, 7% junior). This second deal expanded the collateral pool to include private and SOE loans in infrastructure, energy, and housing, and introduced a mezzanine tranche aligned with international standards to attract global investors.

BOAD 2023 Hybrid Securitisation Structure

The Impact

• BOAD’s first transaction mobilised XOF 150 billion, with strong demand from regional banks, pension funds, insurers, and some international investors.
• The structure enabled capital relief under Moody’s and Fitch methodologies and generated liquidity from sovereign loans.
• The second transaction closed in just 3.5 hours, reflecting growing investor confidence and market maturity.
• BOAD’s model proved technically feasible, repeatable, and cost-efficient, with transparent returns linked to loan performance.
• The programme supported local currency financing, reduced currency mismatch risk, and helped build West African capital markets.