World Bank Launches FY2019 Benchmark Program with US$5 Billion Bond for Sustainable Development

Washington, DC, July 18, 2018—The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) today priced its first global benchmark issue in fiscal 2019*, returning to the market with a US$5 billion three-year bond for sustainable development that received overwhelming support from investors. This is the World Bank’s first global U.S. dollar benchmark since November 2017.

The transaction was significantly oversubscribed. There were orders for US$7.3 billion from more than 125 investors in 33 countries. The majority of orders came from central banks and official institutions. There was also significant demand from bank treasuries, corporates, asset managers, and pension and insurance funds from around the world.

The three-year benchmark has a semi-annual coupon of 2.750% per annum and a maturity date of July 23, 2021. It offers investors a yield of 2.832%, equivalent to 14.95 basis points over the 2.625% U.S. Treasury due July 15, 2021. Joint lead managers for this bond are Bank of America Merrill Lynch, Citi, J.P. Morgan, and Morgan Stanley.

Order books were opened for indications of interest on July 17 at 3 pm London time with an initial price guidance of mid-swaps minus 3 basis points. When the books formally opened on July 18 at 8.30 am London time, there were over US$ 4.6 billion in indications of interest. Within a few hours, with a revised price guidance to mid-swaps minus 4 basis points, demand grew to US$ 6.5 billion. Order books closed at 1:30 pm London time, with the spread set at mid-swaps minus 5 basis points.

Arunma Oteh, Vice President and Treasurer, World Bank, said: “This is a fantastic result for our first U.S. dollar global benchmark of the fiscal year. It shows that the market welcomes opportunities that offer safety, liquidity, and positive social impact. We are grateful for the support from investors around the world, and look forward to deepening our partnerships in the year ahead.”

Adrien De Naurois, Head of EMEA Debt Syndicate and SSA Origination, Bank of America Merrill Lynch, said: “An exceptional transaction. The World Bank has initiated the funding programme for their 2018-19 financial year with a U.S. dollar 5 billion three-year new issue, offering the tightest spread to U.S. Treasuries in the SSA sector in 2018. The final size and quality of the orderbook reaffirmed the strength and depth of the World Bank’s positioning among its global investor base.”

Philip Brown, Head of SSA Origination, Citi, said: “A triumphant return to the U.S. dollar benchmark market for the World Bank after some time of focus elsewhere. This order book and pricing highlights that investor excitement for World Bank dollar benchmarks remains as strong as ever. With this bond, the World Bank’s funding program for the new fiscal year is off to a flying start. Citi is delighted to have played a role in this important transaction for both the World Bank and the U.S. dollar market.”

John Lee-Tin, Head of SSA DCM, JPMorgan, said: “With this deal, the World Bank proves that absence DOES make the heart grow fonder, illustrated in a jumbo book for its latest U.S. dollar benchmark. Despite sustaining one of the largest annual funding programmes in the market, the World Bank has been absent from the U.S. dollar market in 2018 until this deal, as it has attracted large volumes of funding across several other currencies. But like most issuers, it likes to maintain a regular presence in the U.S. dollar benchmark market, and serially provide its core investor base an opportunity to re-load on exposure. Investors did not disappoint, with a total orderbook over US$ 7 billion from over 125 investors globally. A fabulous result considering that we are in the middle of the summer.”

Navindu Katugampola, Head of SSA Origination, Morgan Stanley, said: “Good things come to those who wait, and this has been epitomised by a phenomenal new three-year deal from the World Bank, the tightest print in this tenor that we have seen all year. It is somewhat surprising that this is the World Bank’s first U.S. dollar benchmark outing of 2018, however, the World Bank is active across such a wide range of currencies and structures in the capital markets that they can afford to be highly selective about what they choose to do and when. The World Bank is also a highly responsive, proactive issuer, and with this transaction they captured the perfect confluence of an optimal market window, ardent investor demand, and a brand new fiscal year with plenty of funding to prosecute. It was our privilege at Morgan Stanley to be able to support the World Bank in this endeavour.”

The World Bank issues between US$50-US$60 billion annually in bonds for sustainable development. These range from structured notes that highlight the Sustainable Development Goals to benchmark-sized issuances that cover a variety of impact themes including climate, education, gender, health, social services and clean water and sanitation. A key priority for the World Bank’s engagement in the capital markets is to build strategic partnerships with investors and other market participants to raise awareness for development challenges and accelerate opportunities to mobilize finance for development.

*The World Bank’s fiscal year begins on July 1.

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 is the original member of the World Bank Group and operates as a global development cooperative owned by 189 nations.

The World Bank provides loans, guarantees, risk management products, and advisory services to middle-income and other creditworthy countries to support the Sustainable Development Goals and to end extreme poverty and promote shared prosperity. It also provides leadership to coordinate regional and global responses to development challenges.

The World Bank has been issuing sustainable development bonds in the international capital markets for over 70 years to fund programs and activities that achieve a positive impact. More information on World Bank bonds is available at www.worldbank.org/debtsecurities.