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PRESS RELEASE May 28, 2008

Uruguay: First Bond Transaction to Provide World Bank Financing in Local Currency

Montevideo, May 28, 2008 — The World Bank (International Bank for Reconstruction and Development, IBRD) today became the first foreign issuer to launch a public bond in Uruguayan Pesos. The World Bank will pass the proceeds on to the Uruguayan Government. This is the first time the World Bank is providing local currency financing to a member country by directly funding in that country’s own currency.

This bond represents an important milestone for the World Bank and its clients. Although the World Bank has issued bonds in other Latin American currencies such as Mexican Peso, Chilean Peso, Brazilian Reais, and Colombian Pesos, this Uruguayan Peso transaction is the first bond ever to be issued for the purpose of a back-to-back disbursement of a specific loan, in this case the First Programmatic Reform Implementation Development Policy Loan (PRIDPL 1), approved by the World Bank’s Executive Board of Directors in May 2007.

This loan supports the implementation of reforms that will help Uruguay to strengthen capital markets, achieve sustainable growth at higher rates, fight poverty and exclusion, and assure equitable access to opportunities.

“Today’s transaction with the World Bank is significant for Uruguay and is an important step towards de-dollarization of our debt portfolio,” said Danilo Astori, Minister of Economy and Finance of Uruguay. “Over the last few years, the government has pursued a path of increasing the percentage of local currency debt through issuance of index-linked notes in the capital markets. Incorporating the multilateral development banks in our strategy of de-dollarization is a highpoint and opens a new range of alternatives available to us to continue with the professional management of our financial obligations.”

The bond, an Uruguayan Peso (UYU) 1,981.53 million (USD $100 million) inflation-indexed Euronote, will carry a coupon of 3.4% and will mature on April 15, 2017. These bonds are linked to the Uruguayan inflation index Unidades Indexadas (UI), a widely used index for financial transactions in Uruguay. The bond issue was very well received by both domestic and international investors. The transaction was oversubscribed, with demand reaching three times the fixed notional amount on offer. Domestic institutional investors purchased around 75 % of the issue; the remaining 25 % was placed among investors in Europe (7%) and North America (18%). The lead interest from the domestic investor base was from República AFAP (RAFAP), Uruguay's largest pension fund.

“This investment is a milestone in the development of the Uruguayan Pension Fund System since this is the first triple-A investment denominated in local currency which contributes towards diversifying credit risk of our portfolios,” said Martín Larzabal, Portfolio Manager of República AFAP. “This transaction also plays an important role in helping the government to limit its exposure to foreign currencies by hedging the disbursement in Uruguayan pesos of a World Bank loan to the country."

Deutsche Bank was the sole arranger of this transaction.

Zia Huque, Global Head of Syndicate at Deutsche Bank, commented "as the first-ever foreign issuer of an inflation-linked benchmark in Uruguayan Pesos, the deal illustrates that the World Bank continues to be a market leader in innovative emerging markets bond issuance. The strong global interest resulted in a very successful landmark offering, which met both investors' needs and the World Bank's own high standards for issuance. Deutsche Bank's commitment to emerging markets is well established and we're honored to bring this expertise to working with the World Bank and the investment community to expand further IBRD's development mandate."

The transaction is part of the World Bank’s ongoing efforts to respond to requests from its borrowing member countries to provide local currency financing so they can reduce their vulnerability to foreign currency debt. This operation will also contribute to a diversification of Uruguay’s pension funds and will help generate greater international awareness about the potential of the country’s capital markets.

This Uruguayan Peso bond issued by the World Bank is also an important transaction for the Uruguayan capital market, since it highlights the level of development in terms of depth, breadth and liquidity attained by the local capital market.

According to Kenneth Lay, Vice-President and Treasurer of the World Bank, “this transaction is another way for our development cooperative to respond to the needs of its members. A number of our clients are interested in increasing the share of local currency financing in their public debt. We are pleased that this issue facilitates that process.”

The transaction also reflects the advances made in the process of institutionalization of savings through key regulatory changes that have expanded the investor base, increased the efficiency of investment vehicles, and enhanced investor confidence. In addition, the World Bank bonds provide domestic investors with an opportunity to diversify their portfolio holdings.

About the World Bank

The World Bank is a global development cooperative owned by its member countries. Its purpose is to help its members achieve equitable and sustainable economic growth in their economies and to find solutions to regional and global problems in economic development and environmental sustainability, all with a view to reducing poverty and improving standards of living. The International Bank for Reconstruction and Development (IBRD), rated Aaa/AAA (Moody’s/S&P) is owned by 185 countries. It is the oldest and largest entity in the World Bank Group and provides its members with financing, risk management products, and other financing services, as well as specialized expertise and strategic and convening services requested by its member countries. To fund this activity, IBRD has been issuing debt securities in the international capital markets for 60 years. The World Bank is one of the most recognized and innovative borrowers in the international capital markets. More information about the World Bank and its activities in the capital markets is available on the web at:

The World Bank's bond products and investor presentation can be accessed through the website of the World Bank for bond investors ( For a list of selected bonds issued recently by the World Bank, see: