A new Eurodollar issue of undated floating rate notes, in an aggregate principal amount of US$ 500 million, was announced today by the International Bank for Reconstruction and Development, also known as the World Bank. The undated notes have no fixed maturity date. The notes will bear interest at a rate corresponding to the money market yield of the 91-day U.S. Treasury bill plus 1/2%, payable and reset quarterly. They will be offered at par.
Investors will have an option at every quarterly interest payment date, starting in September 1985, to convert their undated notes into three-month notes that will bear interest at a rate equal to the money market yield of the 91-day U.S. Treasury bill. Upon maturity, the three-month notes may be redeemed at par or, again at the option of the holder, be reconverted into undated floating rate notes. The notes will become callable as of March 1986.
This issue is co-lead managed by Morgan Guaranty Ltd and Salomon Brothers International Limited and co-managed by an international syndicate of commercial and investment banks. The undated floating rate notes will be listed on the Luxembourg Stock Exchange.
The issue has several special features. It is the first long-term floating rate note having a U.S. Treasury bill pricing benchmark to provide investors with conversion options, thereby ensuring liquidity and protection against capital losses. Moreover, the World Bank is assured funding for minimum term of 5 1/4 years, irrespective of any conversions that might occur, through a back-up underwriting facility being arranged by Morgan Guaranty Ltd.
The proceeds of this issue will be used in the general operations of the World Bank.
Including this issue, the World Bank’s outstanding U.S. dollar obligations, consisting of both public and private borrowings in the domestic and Euromarkets, aggregate approximately US$ 15.7 billion.
