The World Bank announced today a Y40 billion ($286 million) public offering in the domestic Japanese yen market of its "Daimyo" bonds. The bonds will pay 4.25 percent interest annually. They are priced at 100-3/8 and have a final maturity of 10 years for a yield of 4.16 percent on a semi-annual coupon equivalent basis. This is the World Bank's second issue of Daimyo bonds.
The offering is being made through a syndicate of 20 Japanese and foreign securities firms headed by Yamaichi Securities Company, Limited. The agreements will be signed on May 19 in Tokyo.
Though a Daimyo bond issue bears many similarities to a Euroyen transaction, it is not subject to the three-month restriction on purchases by domestic Japanese investors that is applicable to Euroyen bonds. The similarities are designed to enhance the domestic issue's liquidity and include, first, the settlement of trades through international book-entry clearance systems Euroclear and Cedel) that simplify the transfer of securities. Second, the Daimyo issue will be listed on the Luxembourg Stock Exchange, and it is expected that secondary market trading will take place in both the Euromarket and the Tokyo market, thereby integrating domestic and foreign demand for Japanese yen bonds. Third, market makers in Japan will be allowed officially to take short positions on a contract basis for up to 20 days.
Further, the issue can be reopened in the future to increase the size of the issue by additional offerings having the same maturity and coupon rate.
The World Bank's management has expressed its appreciation for this further demonstration of support from the Japanese authorities and the investment community toward the Bank's development efforts.
Total funds raised by the World Bank in Japanese yen, including this issue, amount to Y3,760 billion (about $27 billion at current exchange rates), of which Y2,900 billion (about $21 billion) remain outstanding.