Sydney, October 7, 2009 – The World Bank (International Bank for Reconstruction and Development, rated Aaa/AAA) today priced a dual tranche (5 and 10-year) benchmark Kangaroo transaction. This transaction marks the return of the World Bank to the Kangaroo market after a 3-year absence and is the market’s first ever dual-tenor offering.
The A$800 million 5-year fixed rate notes are due on October 21, 2014 and have a semi-annual coupon of 5.50%, a semi-annual yield of 5.665%, and a reoffer price of 99.290%. This equates to a spread of 54.5 basis points over the ACGB 6.25% due June 15, 2014. The A$600 million 10-year fixed rate notes are due on October 21, 2019 and have a semi-annual coupon of 5.75%, a semi-annual yield of 5.98%, and a reoffer price of 98.288%. This equates to a spread of 80.25 basis points over the ACGB 5.25% due March 15, 2019. The settlement date for both tranches is October 21, 2009.
The joint lead-managers for the transaction are Commonwealth Bank of Australia, RBC Capital Markets, TD Securities and Westpac and the co-managers are ANZ Banking Group and UBS.
The dual tranche offering was launched with an initial target size of A$500 million for each tranche, but the demand grew quickly to allow both tranches to be upsized.
The distribution reflects the highest quality and breadth of investors. The 2014 notes were placed with institutional investors in Australia 67%, Asia 20%, North America 6% and Europe 7%, whilst the 2019 notes were placed with institutional investors in Australia 37%, Asia 32%, North America 20% and Europe 11%. Investors were attracted by the rarity of the issuer in this market, the global recognition of the name, the strength of the credit, the choice of tenors and the liquidity and benchmark size of the transaction.
The transaction set several records in the Australian bond market:
Quotes from the World Bank and Lead-Managers
“This is the World Bank’s first AUD benchmark bond since 2006. We are delighted to return to the Australian market after such a long time and appreciate the excellent reception that our bonds received. Over the past few years, we continued our dialogue with Australian investors, which we hope also contributed to the success of this transaction.”said Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank.
“The World Bank’s innovative dual tranche approach to the Kangaroo market identified two largely distinct investor bases. This enabled the World bank to achieve benchmark volumes in both lines with limited cross pollination between the two tranches." said Peter Christie, Head of Fixed Income at CBA.
"The World Bank is considered the premier name in the international capital markets and we are pleased to have joint lead managed their return to the Kangaroo market. The distribution was solid with domestic participation accounting for over 54% of the book and the rest coming from a variety of investors around the globe. This is also the first dual tenor offering in the Kangaroo market and the market's reception and acceptance was great." said Enrico Massi, Managing Director, Head of Debt Capital Markets - Asia Pacific at RBC.
"TD is very pleased to bring the World Bank back to the Kangaroo market after a 3-year absence. The issuer's scarcity in the Australian domestic market saw its dual tranche transaction meet investor demand not seen by a SSA Kangaroo for many years. While we certainly had high expectations for this issue heading into the launch, we could not have predicted the depth and quality of the order books for both tranches. There were 44 buyers of the 5-year, and 28 buyers of the 10-year. This outstanding result clearly suggests that the World Bank remains one of the premier issuers in the world and that this dual tranche approach was a welcome innovation in the Kangaroo market." said Tom Irving, Head of Asia Syndicate at TD Securities.
“Westpac is pleased to have worked with the World Bank again as they returned to the Kangaroo market. The deal’s strong reception reflects the value attributed to the World Bank name across global investors in Australian dollar denominated product. The dual tranche offering sets up two good price points either side of the existing 2016
bond and helped capture the widest investor audience.” said Mark Goddard, Executive Director, Head of Syndicate at WIB.
The notes are issued under the laws of New South Wales and documented under the World Bank's Global Debt Issuance Facility. The notes will be listed on the Luxembourg Stock Exchange, will settle through Austraclear, Euroclear and Clearstream, and are expected to qualify as eligible collateral for repurchase agreements for the Reserve Bank of Australia’s open market operations.
*On January 18, 2011, the existing 5.50% October 21, 2014 line was increased by A$600 to a total of A$1.4 billion. The increase has an issue price of 99.633 (plus 1.481 accrued interest) to yield 5.6075% (semi-annual), which equates to a spread over the June 15, 2014 ACGB of 49.25 basis points.
The existing 5.75% October 1, 2020 line was increased by A$400 million to a total of A$1.1 billion. The increase has an issue price of 97.105 (plus 1.864 accrued interest) to yield 6.15% (semi-annual), which equates to a spread over the April 15, 2020 ACGB of 65.5 basis points.
About the World Bank
The World Bank is a global development cooperative owned by its member countries. Its purpose is to help its members achieve equitable and sustainable economic growth in their economies and to find solutions to regional and global problems in economic development and environmental sustainability, all with a view to reducing poverty and improving standards of living. The International Bank for Reconstruction and Development (IBRD), rated Aaa/AAA (Moody’s/S&P) is owned by 187 countries. It is the oldest and largest entity in the World Bank Group and provides its members with financing, risk management products, and other financing services, as well as specialized expertise and strategic and convening services requested by its member countries. To fund this activity, IBRD has been issuing debt securities in the international capital markets for 60 years. The World Bank is one of the most recognized and innovative borrowers in the international capital markets. The World Bank designed and issued the first global bond in 1989. Information on the World Bank, its global bonds and a variety of other offerings available for investors is on the World Bank Treasury website: www.worldbank.org/debtsecurities.
