Press Release
Title: Decrease in Fixed Spread for IBRD Flexible Loans
Washington, DC December 4, 2018 - As of 12:01 a.m. December 5, 2018, Washington D.C. time the fixed spread over LIBOR (or EURIBOR) will decrease for new IBRD Flexible Loans (IFLs) for all maturities and all currencies. The fixed spreads shown in the table below will apply to all IFLs with a fixed spread signed on or after December 5, 2018, local time at the place of signing.
IFL Fixed Spread for USD Denominated Loans Signed on or after December 5, 2018 | ||||||
Average Maturity | 8 years and below | Greater than 8 and up to 10 years | Greater than 10 and up to 12 years | Greater than 12 and up to 15 years | Greater than 15 and up to 18 years | Greater than 18 and up to 20 years |
Projected Funding Spread (Prior) | 5 (10) | 15 (20) | 15 (20) | 20 (30) | 25 (35) | 25 (35) |
Market Risk Premium | 10 | 10 | 10 | 10 | 15 | 15 |
Contractual Lending Spread | 50 | 50 | 50 | 50 | 50 | 50 |
Standard Maturity Premium (Group C)1 | 0 | 10 | 30 | 50 | 70 | 90 |
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Total Spread – Current2,3 | ||||||
Group A | 65 | 85 | 95 | 110 | 130 | 140 |
Group B | 65 | 85 | 100 | 120 | 145 | 160 |
Group C | 65 | 85 | 105 | 130 | 160 | 180 |
Group D | 70 | 90 | 115 | 145 | 180 | 205 |
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Total Spread – Prior3,4 |
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Group A | 70 | 90 | 100 | 120 | 140 | 150 |
Group B | 70 | 90 | 105 | 130 | 155 | 170 |
Group C | 70 | 90 | 110 | 140 | 170 | 190 |
Group D | 75 | 95 | 120 | 155 | 190 | 215 |
Notes:
1. The current maturity premium and its associated adjustments are applicable to loans for which an Invitation to Negotiate was issued (i) on or after July 1, 2018; or (ii) prior to July 1, 2018, and which are approved on or after October 1, 2018. Group A pricing applies to the loans not meeting these criteria. Group A pricing is also applicable to IDA financing under the scale-up facility and for transitional support credits.
2. Applies to USD-denominated loans meeting the criteria described under Note 1. A basis swap adjustment of -0.15% is applicable to EUR-fixed spread, -0.35% is applicable to the JPY fixed spread, and -0.05% is applicable to GBP-fixed spread. The total spread does not include the SBL surcharge applicable for exposure beyond the Single Borrower Limit of IBRD.
3. The lending rate of a loan is determined based on the Reference Rate and Total Spread effective on the rate setting date subject to an implicit floor of zero on the overall rate.
4. Total prior spread applicable as of December 5, 2018.
The decrease in the fixed spread is the result of a decrease in IBRD’s projected funding cost, which Bank management reviews at least quarterly to ensure that it reflects evolving, underlying market conditions.
This change does not affect the pricing of IBRD Flexible Loans with a variable spread.
Up-to-date lending rates are available at the World Bank Treasury website. Please contact Miguel Navarro-Martin for more information.
