Washington, DC, May 11, 2009 – The World Bank (International Bank for Reconstruction and Development, IBRD, rated Aaa/AAA) has sold its first 10-year benchmark bond denominated in euro (EUR). The EUR 3 billion bond represents a further expansion of the capital markets product line with which the World Bank raises funding to meet the financing needs of its sovereign member clients.
The bond pays a coupon of 3.875% and has a final maturity of May 20, 2019. The selection of a 10-year tenor responds to strong demand for bonds denominated in euro in that part of the curve from an issuer with the highest credit rating. Funds raised through the issuance of these bonds will be used in member countries for development programs that promote sustainable economic growth with the goal of overcoming poverty and improving the standards of living for people worldwide.
The bond was initially targeted as a EUR 1-2 billion offering at a price guidance of 45 to 50bps over mid-swaps. Once initial price guidance was released, the book grew very quickly to exceed EUR 3 billion by the end of the first hour, and closed two hours later at EUR 5.5 billion in size. In this period, the pricing was narrowed down to “+45 bps area” and again to the final spread of +43 bps over mid swaps, which represents the tightest spread that a Supranational has achieved in the 10-year sector this year.
The orderbook accumulated over 200 orders, achieving very strong diversification. As a result of the strong demand and robust order book, the World Bank decided to set the issue size at EUR 3 billion.
As the World Bank’s largest ever non-USD benchmark, this issue further extends the World Bank’s strategy of engaging investors in a variety of bond markets around the world. The World Bank issued the world’s first-ever global bond, a US dollar offering, in 1989. Subsequently, the World Bank has issued global bonds in other currencies, including four Deutsche Mark-denominated global bonds in the 1990s.
This second euro-denominated benchmark transaction was lead-managed by Calyon, Credit Suisse, Deutsche Bank and Goldman Sachs. Senior Co-Lead Managers are: HSBC, Morgan Stanley and Royal Bank of Scotland. Co-lead Managers are: Banca Akros S.p.A., BNP Paribas, Barclays Bank, Citigroup Global Markets, DekaBank Deutsche Girozentrale, Daiwa Securities, J.P. Morgan Securities, Bank of America Merrill Lynch, Mitsubishi UFJ, Nomura International, Natixis, Royal Bank of Canada, Skandinaviska Enskilda Banken AB, and UBS.
Details on the distribution of the bonds by investor type and location are:
Investor Distribution:
By Geography
Asia 9%
Benelux 8%
France 15%
Germany 23%
Italy 7%
Switzerland 13%
United Kingdom 11%
Other 14%
By Investor Type
Central Banks / Official Institutions 13%
Banks / Corporates 37%
Fund Managers 30%
Pension Funds / Insurers 20%
Amount: EUR 3 billion
Summary Terms and Conditions:
Settlement date: May 20, 2009
Maturity Date: May 20, 2019
Issue / Re-offer price: 99.374%
Coupon: 3.875% annually
Spread: +56.5 basis points over the 3.75% Bund due Jan 2019 (Mid-swaps +43 bps)
Denomination: EUR 1,000 and multiples thereof
Format: Registered notes
Listing: Luxembourg
Clearing systems: Euroclear or Clearstream Luxembourg
ISIN: XS0429114530
The notes will be governed by English law and documented under IBRD's Global Debt Issuance Facility. The notes will be listed on the Luxembourg Stock Exchange and will settle through Euroclear and Clearstream Luxembourg. The notes are expected to qualify as eligible collateral for repurchase agreements for the European Central Bank’s open market operations.
Quotes from the World Bank and Lead-Managers
World Bank
“We are extremely pleased with this transaction. With this issue we have extended the duration and refreshed the World Bank presence in the euro market. The response from investors has been strong and diverse and is consistent with our strategy of diversifying the Bank's investor base.” – Doris Herrera-Pol, Director and Global Head of Capital Markets, World Bank Treasury
Lead Managers
"The rapidity of the book building and the breadth and quality of the orders were quite fantastic, highlighting the appeal of the World Bank’s name. The World Bank spotted a very favorable window of issuance to deliver their debut 10-year EURO benchmark” – Pierre Blandin, Global Head of SSA Origination, Calyon
“This transaction followed an extensive series of road shows targeted at real money accounts in Europe further reflecting the World Bank’s strategy of re-engaging with core investors globally in light of its current and projected higher borrowing requirements. As anticipated the high quality and rarity of the World Bank name in euros produced strong demand and an extremely rapid bookbuilding. We were very happy to be involved in the World Bank’s first 10-year euro issue and extremely pleased with the outstanding success of this transaction.” – Ed Mizuhara, Head of Frequent Borrower Syndicate, Credit Suisse
“This deal is what the market has long been waiting for, in terms of maturity, quality and rarity. The back-up in Bund yields, the availability of a decent spread over the Bund and the more favorable underlying market tone have made this issue incredibly appealing to EURO investors. We are very impressed by the breadth and quality of demand. The EURO market again demonstrates its capacity to provide cost-effective 10-year financing in size. We are very honored to joint lead manage the World Bank's inaugural 10-year EURO benchmark offering.” – Ralph Berlowitz, Head of Liquid Credits Syndicate, Deutsche Bank AG
"This was yet another highly successful strategic benchmark for the World Bank and we were very pleased to be involved. The deal gave the market exactly what it wanted in terms of credit quality, yield and maturity. The extremely fast book building and highly granular book with more than 200 accounts confirms the unique position the World Bank commands within the high grade SSA space. The issuer once again re-opened an important segment of the market and paved the way for other borrowers in this strategic maturity segment." – Martin Weber, Head of SSA Syndicate and Origination, Goldman Sachs International
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 186 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. The World Bank designed and issued the first global bond in 1989. Information on the World Bank, its global bonds and a variety of other offerings available for investors is on the World Bank Treasury website: www.worldbank.org/debtsecurities.
