Washington, DC, September 11, 2014 –The World Bank (IBRD, Aaa/AAA) priced today a new 1-year offshore Renminbi benchmark transaction raising a total of CNY 1.25 billion (approximately USDeq. 204 million). The size of the transaction was increased from its initial target size on the back of the strong order book primarily driven by central banks. The joint-lead managers are Credit Agricole Corporate and & Investment Bank, HSBC Bank plc. and Société Générale.
This is the third World Bank Renminbi issue this year.
The current 1-year Renminbi issue carries a semi-annual coupon of 2.40% and matures on September 18, 2015. This coupon equates to approximately 15 basis points below the Chinese government bond yield. After conversion of proceeds to US dollars—the World Bank’s main lending currency—today’s pricing achieved equivalent funding costs for IBRD’s investors available in other funding markets, such as the US dollar or Euro. The transaction also allowed the World Bank’s core investor base—central banks—to further diversify the currency composition in World Bank bond investments.
Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank said, “We are pleased to meet investor demand for the second time this year for a Renminbi transaction with the highest credit quality at optimal pricing conditions. The World Bank remains committed in its support of this market’s development since our first transaction in this currency over three years and look forward to future issuances of this kind.”
In terms of distribution, central banks and official institutions were the dominant buyers of this bond, having taken 92% of the transaction. Bank treasuries and corporates accounted for 5%, and fund managers came in for 3%. By geography, investors from the Americas accounted for 65%, followed by Asia at 32%, and Europe at 3%.
| Investor Distribution | |||
| By Geography | By Investor Type | ||
Americas | 65% | Central Banks / Official Institutions | 92% |
Asia | 32% | Banks / Bank Treasuries / Corporates | 5% |
Europe | 3% | Asset Managers | 3% |
Transaction Summary:
Issuer: World Bank (International Bank for Reconstruction and Development, IBRD)
Issuer rating: Aaa/AAA
Amount: CNY *1.25 billion (USD eq. 204 million)
Settlement date: September 18, 2014
Coupon: 2.4%
Coupon payment dates: Semi-annually on March 18th, 2015 and the Maturity Date
Maturity date: September 18, 2015
Issue price: 100%
Denominations: CNY 10,000 and multiples thereof
ISIN: XS1111600661
Listing: Luxembourg Stock Exchange
Clearing system: Euroclear, Clearstream
Joint lead managers: Crédit Agricole Corporate & Investment Bank, HSBC Bank plc, Societe Genérale Corporate & Investment Banking
*On September 26, 2014, IBRD agreed to increase the principal amount with a second tranche in the amount of CNY 350 million with an issue price of 100% (settlement date: October 9, 2014). The new total outstanding principal amount is CNY 1.6 billion.
Joint Lead Manager Quotes:
Benjamin Lamberg, Global Co-Head of MTNS & Private Placements, and Asian Syndicate at Credit Agricole Corporate and & Investment Bank said, “The Renminbi growth story is not a local ‘dim sum’ Hong Kong story anymore, and it is not even limited to Asia; it is now a global story. The traditional World Bank investor base has seen its reserve in offshore Renminbi increasing substantially, following the greater use of the Renminbi in international transactions. The strong presence of non-Asian investor in this deal is evidence of this.”
Chris Jones, Global Head of Local Currency Debt Syndicate at HSBC Bank plc said, “HSBC is extremely pleased to establish a new benchmark offshore Renminbi line for the World Bank. The involvement of the multilaterals in this market, and in all aspects Renminbi, is key to the development of the offshore Renminbi capital markets as increasingly relevant investable asset class for real money and reserve managers. The 92% distribution into central banks and official institutions is a further statement of the progression of the Renminbi as one of the world's reserve currencies.”
Olivier Vion, Managing Director of Public Sector Debt Capital Markets at Société Générale CIB said, “The new CNY offshore benchmark brought today by the World Bank was a true response to high quality investor demand. With more and more investors involved in this market, the World Bank, thanks to its frequent appearances, is helping to boost the visibility and the relevance of the market by establishing liquid and reference points in the curve.”
About the World Bank
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization created in 1944. It operates as a global development cooperative owned by 188 nations. It provides its members with financing, expertise and coordination services so they can achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global economic and environmental problems. The World Bank has two main goals: to end extreme poverty and promote shared prosperity. It seeks to achieve them primarily by providing loans, risk management products, and expertise on development-related disciplines and by coordinating responses to regional and global challenges. It has been issuing bonds in the international capital markets for over 60 years to fund its activities. Information on bonds for investors is available on the World Bank Treasury website: (www.worldbank.org/debtsecurities).
