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Decrease in Fixed Spread of IBRD Flexible Loans



As of 12:01 a.m. Washington, D.C. time, August 12, 2010, the fixed spread over LIBOR for IFLs with average repayment maturities greater than 12 years will decrease due to a reduction in projected funding costs for these loans. The specific decrease will vary according to the average repayment maturity of the new loan at commitment (i.e., at Board approval). The pricing for loans with an average repayment maturity of 12 years or less will remain unchanged (1).

The new fixed spreads shown in the table below will apply to all loans signed on or after August 13, 2010, local time at the place of signing.  Current pricing information is also available on the lending rates page of the World Bank Treasury website.

  For IBRD Flexible Loans with a Fixed Spread
Signed on or After August 13, 2010
Average Repayment Maturity*
Up 12 Years
Greater than
12 to 15 Years
Greater than
15 to 18 Years
Contractual Spread
Maturity Premium (2)
Market Risk Premium
Projected Funding Cost
USD Lending Rate
LIBOR +0.60%
LIBOR +0.85%
LIBOR +1.15%
EUR Lending Rate**
Euribor +0.60%
Euribor +0.85%
Euribor +1.15%
JPY Lending Rate***
LIBOR +0.50%
LIBOR +0.75%
LIBOR +1.05%
Change from Previous Pricing

* As measured by average repayment maturity of the loan at commitment (1).
** All new loans for which invitation to negotiate was issued on or after July 31, 2010 will have Euribor as the reference rate rather than EUR LIBOR.
***A basis swap adjustment of -0.10% is applicable to the JPY fixed spread.

The decrease in the fixed spreads is the result of a reduction in projected funding cost, a technical component of fixed spread pricing, which World Bank management reviews at least quarterly to ensure that it reflects evolving, underlying market conditions. Management is comfortable reducing projected funding costs given the stabilization of IBRD’s current funding levels. However, further changes, higher or lower, may be appropriate as market conditions continue to change.

The contractual lending spread and maturity premiums, set by the World Bank Board of Executive Directors, remain unchanged. This change also does not affect the pricing of IBRD Flexible Loans with a variable spread currently set at the base lending rate (LIBOR for most currencies) +0.28% for average repayment maturities up to 12 years, +0.38% for average repayment maturities of greater than 12 to 15 years, and +0.48% for average repayment maturities greater than 15 to 18 years.

Borrowers with IFLs that have been negotiated, but not yet signed, will continue to have the option, without need for further Board approval, to switch from fixed to variable spread or vice versa, or to change the average repayment maturity of a fixed spread loan.

For more information, please email us at FAB@worldbank.org.

1. For existing variable spread loans that are later converted to a fixed spread, the fixed spread applied will be based on the remaining average repayment maturity of the loan on the fixing or conversion date.
2. Maturity premiums apply to IBRD loans approved after June 30, 2010.