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Conversion Options for the IBRD Flexible Loan

Currency: All or part of the disbursed or undisbursed balance may be converted into a currency which IBRD can efficiently intermediate. Disbursed balances relating to local expenditures may also be converted into the borrower’s local currency subject to the availability of a liquid swap market in the local currency. Note: Based on market conditions, IBRD may be unable to offer fully deliverable transactions for local currency conversions and may therefore limit offerings to non-deliverable conversions.

Interest Rate Basis: The variable lending rate on the disbursed balance may be converted to a fixed rate and vice-versa. The borrower may exercise this option at any time during the life of the loan for all or part of the disbursed and outstanding balance.

Automatic Rate Fixing: The borrower may direct IBRD to undertake automatic rate fixings through interest rate conversions, executed at regular time intervals, or upon certain levels of disbursements. The borrower may exercise this option on all or part of the amounts to be disbursed and cancel this automatic rate-fixing arrangement at any time.

Interest Rate Caps/Collars: The borrower may opt to cap (set an upper limit) or collar (set upper and lower limits) on the variable lending rate for up to the entire disbursed amount.

Conversion Forms: Please refer to the Guidelines for Conversion of Loan Terms above for procedures on requesting, accepting and effecting conversions of the terms of the IBRD Flexible Loan. After downloading the file(s) below, the PDF form(s) can be completed by typing into the required fields. Please fax completed form to the number provided on the form.

Transaction Fees: Expressed as a percentage per annum on the outstanding loan amount unless otherwise indicated.

Transaction Type

Transaction Fee

Interest Rate Conversion

  • Initial rate fixings for up to the full maturity of the loan for amounts up to the outstanding loan amount (1)

No Charge

  • Additional rate fixing/unfixing

0.010%

Interest Rate Caps/Collars

      0.125% (2)

Currency Conversion

  • Of undisbursed loan amounts

      0.125% (2)

  • Of disbursed loan amount

      0.020% (3)

Changing from variable spread to fixed spread

     0.030% (4)

1 Borrowers have the opportunity to obtain a fixed interest rate for the full original loan amount and maturity without a transaction fee. If IBRD is unable to obtain an interest rate swap for the full loan maturity and has to execute two interest rate swaps to fix the interest rate for the full loan maturity, neither interest rate fixing will bear a transaction fee.
2 Expressed as a percentage of the principal amount involved, and payable as a lump sum.
3 An additional fee for convertibility risk may apply for local currency conversions. The amount of this fee will be determined on a country-by-country basis.
4 The variable spread over LIBOR may be changed to a fixed spread over LIBOR, but not vice-versa.  Such “fixing” of the variable spread will be effected at the fixed spread applicable to the loan prevailing at the time of the request.  If the borrower requests a conversion (a currency, or interest rate conversion, or an interest rate cap/collar) of a loan with an interest rate bearing a variable spread, the variable spread will be changed to a fixed spread in respect of the amount being converted, before the Conversion is effected.

Transaction Fees for Early Termination: For early termination of a Conversion (a currency, or interest rate conversion, or an interest rate cap/collar), the transaction fee prevailing at time of early termination for the applicable Conversion will apply (e.g., interest rate fixing which had no transaction fee will bear no transaction fee for early termination).  Transaction fees expressed as a percentage per annum will be converted to a lump sum.

 

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