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PRESS RELEASE January 5, 1990

World Bank Announces Second Global Bond Issue

The World Bank announced today that it plans to launch its second U.S. dollar global bond issue in the coming weeks. The $1.5 billion issue follows the World Bank's highly successful first global bond issue, which was launched in September 1989. The new issue will be underwritten and distributed simultaneously in the euromarkets, the U.S. domestic market, and, in a major new development, the Japanese domestic market. This marks the first time that a single public bond issue will be offered simultaneously, in primary distribution, in all three of the world's largest capital markets. As with the first issue, these securities are designed to trade globally, on a 24-hour basis, through integrated clearing systems in the U.S. and the euromarkets.

The terms of the new issue will depend on market conditions at the time of launch.

The Bank also announced the formation of a multinational group of investment dealers to bring the issue to market. This management team consists of Bank of Tokyo, Banque Paribas, Credit Suisse First Boston, Daiwa Securities, Deutsche Bank, Goldman Sachs, IBJ International, Merrill Lynch, JP Morgan, Morgan Stanley, Nomura Securities, Salomon Brothers, Shearson Lehman Hutton, Union Bank of Switzerland and Warburg Securities. Goldman Sachs and Morgan Stanley will serve as joint lead managers, with IBJ International and Nomura Securities selected to act as co-lead managers.

World Bank Vice President and Treasurer Donald C. Roth stated that this transaction is intended to build upon the signal success of the Bank's first global bond issue, in part by extending primary placement for the first time to all three of the world's premier capital markets. Mr. Roth noted, "The first global bond issue had lived up to its name well by tapping substantial investor interest around the world and providing an instrument unique in its combination of credit standing, investor return and liquidity." He added, "We expect this second issue to perform at least as well as the first, particularly since those investors who may have been skeptical about the first global bond can now see that the Bank's expectations for that issue were fully met."

The World Bank's first global bond issue was the product of an extensive review by World Bank staff of the preferences of investors, money managers and intermediaries in Asia, Europe and North America. By max1m1z1ng the size of the issue and introducing improved intermarket trading and settlement techniques, the Bank sought to increase liquidity and reduce transaction costs for investors. According to Mr. Roth, "The active intermarket trading of the first global bond, the narrow bid/offer spreads and the level of secondary market activity demonstrate that the basic goals have been achieved."

Mr. Roth also noted that the changes in the structure of the management group for the second global bond were not intended as any negative reflection on the first issue's syndicate. He said, "Deutsche Bank and Salomon Brothers performed brilliantly in managing the first global bond. In hindsight, we wouldn't have changed anything they did. The Bank owes a great deal to their expertise and professionalism. However, it is also important for the market to understand that our global syndicate is not engraved in stone. We have chosen the world's preeminent firms as our global managers. We feel any of the firms in our syndicate could successfully step into the lead manager role." Mr. Roth added, "I have little doubt we will see the orchestrators of the first global issue in the lead management position again for future global bond issues."

 


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