Washington, DC, April 3, 2014 – The World Bank (International Bank for Reconstruction and Development, IBRD, rated Aaa/AAA) today priced a USD 2.25 billion 4-year fixed rate global bond, making this their largest ever offering in this maturity. This is the World Bank’s third USD benchmark size initial offering of 2014, following a USD 4 billion 5-year in January and a USD 5 billion 2-year in February. The transaction was upsized from the initially targeted minimum size of USD 1 billion encouraged by the positive investor response, especially from the central banks and official institutions. This was particularly commendable considering the off the run 4-year maturity, and is a testament to the recognition of the World Bank credit globally.
The joint-lead managers are Citi, Deutsche Bank and Goldman Sachs International.
The 4-year bond carries a coupon of 1.375% paid semi-annual and matures on April10, 2018. It offers investors a semi-annual yield of 1.473%, which is equivalent to a spread of 56.05 basis points over the 0.75% U.S. Treasury note due March 2017.
“We saw that there was an opportunity to do a USD transaction at this maturity and are very pleased with the strong demand - seeing orders more than double our initial target - principally from our core investor base. We're grateful for the support we get from our investors and bank partners for the World Bank's development mandate and the demonstration that investors continue to value the safety of the World Bank“, said George Richardson, Head of Capital Markets, World Bank Treasury.
Issuer: World Bank (International Bank for Reconstruction and Development, IBRD)
Issuer rating: Aaa/AAA
Amount: USD 2.25* billion
Settlement date: 10 April 2014
Coupon payment dates: Semi-annually on 10 April and 10 October (first coupon on 10 October 2014)
Maturity date: 10 April 2018
Issue price: 99.621%
Issue yield: 1.473%
Listing: Luxembourg Stock Exchange
Clearing system: Fedwire, Euroclear, Clearstream
Joint lead managers: Citigroup, Deutsche Bank, Goldman Sachs International
*IBRD agreed to increase the principal amount with the issuance of nine additional tranches in the amounts USD 250, 200, 200, 200, 200, 100, 100, 100, and 450 million. The new total outstanding principal amount is USD 3.85 billion.
The present transaction is consistent with the World Bank’s longstanding practice of deploying its franchise as an issuer in the international capital markets to offer investor’s high-quality, liquid instruments. This approach has direct benefits for World Bank member countries as well, since as a cooperative institution it is able to fund its activities as a provider of financial services to its members on highly attractive terms.
Joint lead manager quotes:
"It is a privilege to execute for the World Bank, whose bonds are so readily absorbed by so many of the world’s official institutional buyers", said Philip Brown, Citi, Managing Director, Head of Public Sector Origination.
"We congratulate the World Bank for capitalising on a narrow issuance window ahead of the upcoming data, with the deal also expertly timed against the recent back up in outright treasury yields. The swift execution process, more than double the target USD 1 billion notional, and high quality order book in an off-the-run maturity are testament to the loyal investor following the World Bank enjoys. The trade exceeded all expectations and reminds us of IBRD's USD 2 billion 1.125% due August 2014 / 4-year Global IBRD brought in 2010 - we're pleased to see they've done it again", said Bill Northfield, Head of SSA Origination at Deutsche Bank.
"This is an astute transaction from the World Bank, and marks the first sub-libor transaction beyond the 3yr maturity in 2014. The strong central bank support for this transaction illustrates the continued attractiveness of World Bank paper in the current environment", said Lars Humble, Head of SSA Syndicate, Goldman Sachs International.
About the World Bank
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization created in 1944. It operates as a global development cooperative owned by 188 nations. It provides its members with financing, expertise and coordination services so they can achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global economic and environmental problems. The overriding goal is to achieve major, sustainable improvements in standards of living worldwide. It has been issuing bonds in the international capital markets for over 60 years to fund its activities. Information on bonds for investors is available on the World Bank Treasury website: (www.worldbank.org/debtsecurities).