Development Bank Bonds

UBS views Multilateral Development Bank (MDB) bonds as an attractive, high-quality alternative to cash, offering a modest yield premium over US Treasuries. The asset class is supported by significant global commitments to climate adaptation and a potential easing cycle by central banks.

Key Takeaways

• 1.Multilateral development bank (MDB) bonds offer a high-quality alternative to cash with slightly higher yields than US Treasuries.
• 2.Climate adaptation finance is a significant driver for MDBs, with over USD 31 billion committed in 2024 following the COP30 conference.
• 3.Market risks are centered on the conflict in the Strait of Hormuz and energy prices, though central banks are positioned to handle potential supply shocks.

Table of Contents

• Central scenario
• Global Asset Class Preference Attractive
• Development Bank Bonds
• Upside scenario
• Downside scenario
• Global asset class preferences definitions
• Appendix
• Risk information

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