The World Bank plans to issue up to one billion dollars this year in a first hybrid issue on the capital markets, in a context in which commercial banks are looking to increase their lending.

The attempt to explore new forms of financing is linked to the need to support developing economies, says Reuters.

The World Bank would be only the second multilateral lender to issue an instrument of this type, after the African Development Bank (AfDB) put its hybrid capital bond on sale in January - the first financing of this type granted by a multilateral lender.

When the ADB sold this subordinated, debt-like equity instrument, it said it hoped to establish this type of financing as a new asset class.

"We are working towards a potential pilot transaction later this year," said George Richardson, director of the Treasury's capital markets and investment department at the World Bank.

Regarding the ratings that would be assigned to the new instrument, Richardson said that the World Bank was convinced that hybrid capital issued by multilateral development banks would be a better credit, in relation to senior unsecured bonds, than that currently reflected in the rating agencies' methodologies.

"These state that hybrid capital will be rated between 3 and 5 levels below the main ratings," he said, adding that Fitch was undergoing a change in methodology and that it was not yet known what changes the rating agency would make in relation to hybrid capital.

Moody's has assigned an AA3 rating to the ADB issue, three notches below the bank's AAA-rated bonds. The ADB's hybrid issue traded at 97.6 cents on the dollar on Tuesday, according to LSEG data, down from its debut of just over 100 cents on the dollar in early February.