The World Bank launched its first global bond offering, a $1.5 billion 10-year issue, simultaneously in the Euromarkets and the U.S. domestic market. With a $1.5 billion issue size, this offering will be the largest fixed-rate dollar-denominated debt issue ever in the international capital markets. The pricing of the non-callable bonds will occur in New York on Tuesday, September 19, 1989, after a 24-hour worldwide pricing discussion with potential investors.
Donald C. Roth, the Bank's Vice President & Treasurer, announced -in London that "the global bond is designed .to provide enhanced value to investors. We expect it to trade as our benchmark issue in the international capital markets and in the agency market in the United States."
The principal new features of the transaction are:
1) Larger size - The size of the Bank's previous dollar issues has ranged from $100 million to $750 million.
2) Global distribution - The issue is being simultaneously launched in the U.S. domestic market and Euromarkets by an international syndicate of 14 leading sponsors, led jointly by Deutsche Bank Capital Markets Limited and Salomon Brothers Inc, that expect to be actively involved in underwriting, distributing and trading the issue.
3) New trading arrangements - Sponsoring dealers will treat the global bond as a "home market" instrument in both the U.S. domestic and international markets. It will trade on sponsors' Eurobond desks in London, on sponsors' government agency desks in New York and in Tokyo on each sponsor's most active U.S. dollar desk.
4) Multiple clearing arrangements - Investors may hold global bonds in one of two ways, either: (i) as with U.S. Treasuries, in accounts with institutions having access in the U.S. to Federal Reserve bookentry accounts and Fedwire; or (ii) as with Eurobonds in accounts with Euro-clear or CEDEL, Newly streamlined procedures have been designed to facilitate settlements between these U.S. and European clearing facilities and substantially reduce associated costs.
The Bank previously announced, on June 8, 1989, its plan to launch a $1.5 billion global bond issue in the coming months. It disclosed at that time that it had had extensive consultations concerning the possible features of the issue over a one-year period with more than 125 institutional investors and retail money managers in 16 countries and with many financial intermediaries in Europe, North America and Asia. The sponsoring investment dealers are the operating affiliates in various markets of the following international financial organizations: Banque Paribas; CS First Boston, Inc.; Deutsche Bank Aktiengesellschaft; Goldman, Sachs & Co.; The Industrial Bank of Japan Limited; Merrill Lynch & Co., Inc.; J.P. Morgan & Co. Incorporated; Morgan Stanley Group Inc.; The Nomura Securities Co., Ltd.; Salomon Inc; Shearson Lehman Hutton Holdings, Inc.; Swiss Bank Corporation; Union Bank of Switzerland and Yamaichi Securities Co., Ltd.
