The following announcement was made today in New York City by Morgan Stanley & Co. and the First Boston Corporation:
A new issue of $75,000,000 three-year 3% dollar bonds of the International Bank for Reconstruction and Development, generally better known as the World Bank, is being marketed today (September 29) by a nationwide underwriting group of 147 investment firms, jointly headed by Morgan Stanley & Co. and the First Boston Corporation. The bonds are being offered in the U. S. at a price of 99-5/3% and accrued interest to yield approximately 3.13% to the maturity date of October 1, 1956. $5,000,000 of the bonds are being taken by a syndicate of financial institutions in Holland. Proceeds of today's financing will be used in the general operations of the Bank.
The bonds have the shortest maturity of any of the seven issues previously marketed in this country by the Bank since the initial offering in 1947. The present 3% bonds are non-callable prior to April 1, 1956, are callable on and after that date, at par and accrued interest, and will not, be subject to a sinking fund.
Foreign participation will be substantial. Requests have been received, originating in 11 foreign countries whose governments are members of the Bank, to purchase an aggregate of approximately $20,000,000 of bonds for special funds. An additional $20,000,000 bonds will be distributed publicly or privately in four other European countries, as follows: In Switzerland., the Swiss Bank Corporation, Basle, and the Credit Suisse., Zurich, are taking just under $10,000,000 for that market. In Holland, the Nederlandsche Handel-Maatschappij, N.V. (Netherlands Trading Society} Amsterdam, is heading a syndicate of other banks and financial institutions which is underwriting $5,000,000 principal amount of the issue. In London, Morgan Grenfell and Co. Limited is acting on behalf of five banking houses in London who are taking $3,500,000 principal amount for placement with purchasers who are eligible to buy them with dollar funds. In addition, Sweden and Belgium will each take $1,000,000.
The extent of the foreign participation in the loan is of interest, not only because of its size, but because of its significance in relation to the increasingly international character of the market for dollar securities of the World Bank.
The current offering is the third issue of World Bank bonds to be brought out in the United States on a negotiated underwriting basis. Previous financing under such arrangements consisted of $50,000,000 in twenty-three year 3-3/8% bonds in May of 1952, and $60,000,000 in nineteen-year 3½% bonds in October of the same year, both issues having been successfully sold through underwriting groups headed by the same firms managing today's offerings. Total funded debt of the Bank, giving effect to issuance of the new bonds, will consist of $643,008,673 expressed in U.S. currency.
The Bank, which began operations in 1946, is an international institution whose membership at the present time is composed of 55 governments. Its principal purposes are: (a} to assist in the reconstruction and development of its member countries by facilitating the investment of capital £or productive purposes, thereby promoting the long-range growth of international trade the improvement of standards of living; (b) to promote private foreign investment by guarantees of and participations in loans and other investments made by private investors, and (c) to make loans for productive purposes out of its own resources or funds borrowed by it when private capital is not available on reasonable terms.
Upon joining the Bank, each member government subscribes to shares of the Bank’s capital stock. Of an authorized 100,000 shares, each share having a par value of $100,000, there are currently outstanding 90,385 shares. The United States has a total subscription of $3,175,000,000 of which $2,540,000,000 remains subject to call and is entitled to cast approximately 31% of the total votes of the present membership.
As of June 30, 1953, the Bank’s loan commitments aggregated the equivalent of $1,590,766,464 to finance programs or projects in 29 countries. Additional loan commitments to September 15, 1953, total $116,202,000. Net income from operations of the Bank, since its inception to June 30, 1953, amounted to the equivalent of $76,513,511 which has been allocated to a supplemental reserve against losses on loans and guarantees. During the same period, the equivalent of $37,236,477 had accumulated in a special reserve from loan commissions.
The underwriting group includes, among others: Bank of America, N.T. & S.A.; Bankers Trust Company; Blyth & Co., Inc.; The Chase National Bank of the City of New York; Chemical Bank & Trust Company; Dillon, Read & Co., The First National Bank of Chicago; The First National Bank of the City of New York; Glore, Forgan & Co.; Goldman, Sachs & Co.; Guaranty Trust Company of New York; Harriman Ripley & Co., Incorporated; Kidder, Peabody & Co.; Lehman Brothers; Manufacturers Trust Company; Merrill Lynch, Pierce, Fenner & Beane; J.P. Morgan & Co., Incorporated; The National City Bank of New York; Salomon Bros. & Hutzler; Shields & Company; Smith, Webster Securities Corporation; Union Securities Corporation; White, Weld & Co.; American Trust Company; Harris Trust and Savings Bank; Landerburg, Thalmann & Co.; The Northern Trust Company; The Philadelphia National Bank; A.C. Allyn and Company, Incorporated; Bear, Stearns & Co.; A.G. Becker & Co. Incorporated; Alex, Brown & Sons, Central Republic Company (Incorporated); C.F. Childs and Company Incorporated; Clark, Dodge & Co.; Dick & Merle-Smith; Dominick & Dominick; Equitable Securities Corporation; Estabrook & Co.; Hallgarten & Co.; Hemphill, Noyes & Co.; Hornblower & Weeks; 1. E. Hutton Co.; W. C. Langley & Co.; Aubrey G. Lanston & Co. Inc.; Lee Higginson Corporation; Mercantile Trust Company; F.S. Moseley & Company; Paine, Webber, Jackson & Curtis; Phelps, Fenn & Co.; Wm. E. Pollock & Co., Inc.; R. W. Pressprich & Co.; L. F. Rothschild & Co.; Dean Witter & Co.; and Wood, Struthers & Co.