Washington, DC, August 31, 2016 – The World Bank (International Bank for Reconstruction and Development, IBRD) today priced the very first Special Drawing Rights (“SDR”)-denominated bond in the PRC National Interbank Bond Market (the “Interbank Market”). The International Bank for Reconstruction and Development 2016 SDR Denominated Bonds (Series 1) (the “SDR Denominated Bond”) raised SDR 500 million (approximately equivalent to USD 700 million), have a maturity of 3 years and a coupon of 0.49% per annum. All payments will be made in Chinese renminbi (RMB).
The SDR Denominated Bonds were issued under the World Bank’s new SDR Denominated Issuance Program that was approved on August 12, 2016, by the People’s Bank of China (PBOC), with a total size of SDR 2 billion (approximately equivalent to USD 2.8 billion).
The joint lead managers for the SDR Denominated Bonds in the Interbank Market are Industrial and Commercial Bank of China Limited, HSBC Bank (China) Company Limited, China Construction Bank Corporation and China Development Bank Corporation. The bonds were 2.5 times oversubscribed with around 50 orders from bank treasuries (53%), central banks and official institutions (29%), securities companies and asset managers (12%), and insurance companies (6%).
“We are honored to support China in its efforts to internationalize its capital and currency markets through the launching of an SDR bond issue and the new Mulan market,” said Arunma Oteh, World Bank Vice President and Treasurer. “It is truly a pleasure for the World Bank to be the first to offer investors an opportunity to participate in this innovative investment product that supports sustainable development worldwide. We are grateful for the excellent collaboration with the Chinese authorities and financial partners.”
August 31, 2016 to September 2, 2016
500 million SDRs
September 2, 2016
0.49% per annum
Coupon payment dates:
Paid annually on September 2 of each year, in Chinese Renminbi
September 2, 2019, payments made in Chinese Renminbi
Settlement, clearing and custodian:
Interbank Market Clearing House Co., Ltd (also known as the “Shanghai Clearing House”)
People's Republic of China law
Industrial and Commercial Bank of China, Ltd.
HSBC Bank (China) Company Limited
Joint lead underwriters:
China Construction Bank Corporation and China Development Bank Corporation
Syndicate group members:
Agricultural Bank of China Limited, Bank of China Limited, Bank of Communications Co., Ltd., China Merchants Bank Co., Ltd., The Export-Import Bank of China, Bank of Ningbo Company Limited, Bank Of Hangzhou Co., Ltd., China International Capital Corporation Limited, CITIC Securities Company Limited, Donghai Securities Co., Ltd., Bank of Tokyo-Mitsubishi UFJ (China), Ltd. and Citibank (China) Co., Ltd.
Joint lead manager quotes:
“We really appreciate that IBRD trusts the Industrial & Commercial Bank of China (ICBC) and appointed ICBC as the lead bookrunner for this landmark transaction. The IBRD 2016 SDR denominated bond is the first ever publicly issued SDR bond worldwide and it is also the first bond for the World Bank in the China onshore interbank market. ICBC has played a key role in the success of this historical issuance. In the future, ICBC expects to assist more foreign issuers to fund in the Panda and Mulan Market,” said Hu Hao, Vice President, ICBC.
“We are delighted to have worked closely with the World Bank to arrange this SDR bond and bring further developments to the RMB financing market. The success of the transaction provides a strong signal of investor appetite for new structures and diversification. As China further opens up its capital markets to international investors, HSBC continues to bring innovation to clients wishing to access the Chinese market,” said Alexi Chan, Global Co-Head, Debt Capital Markets, HSBC.
“We warmly congratulate the successful launch of the World Bank’s SDR bonds in China’s interbank market, which opens up a whole new era for China’s debt capital market. China Construction Bank (CCB) is deeply honored to facilitate this deal and contribute to make it happen. We will take this opportunity to increase our engagement with the World Bank and other international organizations to broaden our cooperation in a more comprehensive way,” said Yu Jingbo, Vice President of CCB.
“China Development Bank (CDB) has made tremendous efforts for the successful issuance of the very first SDR-denominated bond in the China interbank market. We are pleased to see that the SDR bonds are issued in China's fast-growing and more open bond market. As one of the joint lead managers for the SDR bond, CDB stands ready to deepen the cooperation with the World Bank in contributing to development finance and global recovery. In the meantime, we remain committed to expanding the use of SDRs and promoting the RMB internationalization," said Zhang Xuguang, Executive Vice President of CDB.
The law firm of King & Wood Mallesons (Hong Kong and Beijing) acted as counsel for the World Bank on the bond issue.
SDRs (Special Drawing Rights) are an international reserve asset created by the International Monetary Fund (IMF) in 1969 to supplement its member countries' official reserves. The value of the SDR is currently based on four major currencies: the U.S. dollar, euro, Japanese yen and British pound. The Chinese renminbi will join the SDR basket of reserve currencies on October 1, 2016.
The World Bank (IBRD) raises USD 50-60 billion in the international capital markets each year, by offering investors a variety of products in over 20 currencies. The new SDR program in China is part of the World Bank’s strategy to open and support the development of new markets and will expand World Bank’s product offerings, attracting new domestic and international investors to World Bank bonds.
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization created in 1944 and the original member of the World Bank Group. The World Bank Group consists of 5 legally separate organizations: International Bank for Reconstruction and Development (IBRD) – also known as “World Bank”, the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Association (MIGA), and the International Center for the Settlement of Investment Disputes (ICSID). IBRD is the largest member of the World Bank Group and operates as a global development cooperative owned by 189 nations to provide 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 Group has two main goals: to end extreme poverty and promote shared prosperity. IBRD seeks to achieve them primarily by providing loans, risk management products, and expertise on development-related disciplines to its borrowing member government clients in middle-income countries and other creditworthy countries, and by coordinating responses to regional and global challenges. IBRD has been issuing sustainable development bonds in the international capital markets for over 60 years to fund its activities that achieve a positive impact. Information on World Bank (IBRD) bonds for investors is available on the World Bank Treasury website: www.worldbank.org/debtsecurities.
Important Notice: The information set forth herein does not constitute a recommendation of the bonds referred to. It merely provides information of a general nature and is not a recommendation to acquire the bonds, an offer to sell or issue the bonds or the solicitation of an offer to purchase or invitation to tender or subscribe for the bonds. No part of this press release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Any offer and sale of the bonds referred to herein will solely take place on the basis of an offering circular prepared by the World Bank in connection with the bonds. A decision to invest in the bonds must not be made solely in reliance on this press-release but should be taken on the basis of the offering circular. The bonds will only be offered to institutional investors of the National Interbank Bond Market in the People’s Republic of China (excluding Hong Kong, the Macau Special Administrative Region and Taiwan, China).
Serene Jweied, +1 (202) 473-8764, email@example.com