About World Bank Treasury  |  FAQ  |  Contact  
|  

World Bank Approves IBRD Loan Maturity Reform

 

 

WASHINGTON DC, June 22, 2010 — The Board of Executive Directors of the Bank approved the restoration of average loan maturity limits for new loans and guarantees to the pre-2008 level of 12 years. This reform is part of the package of measures to enhance the Bank's financial capacity endorsed by the Development Committee of the Board of Governors of the World Bank and the International Monetary Fund at the 2010 Spring Meetings of the World Bank.

Access to Longer Maturities Remains

Borrowers retain the option to extend the average loan maturity by paying a 10 basis point (0.10%) annual premium for loans with average maturity greater than 12 years and up to 15 years, and a 20 basis point (0.20%) annual premium for loans with average maturity greater than 15 years and up to 18 years (the maximum average maturity available). The premium accounts for the cost of the incremental capital needed for the longer maturities.

Timing of Reform

The maturity reform will apply to IBRD loans and guarantees approved after June 30, 2010. For loans and guarantees at an advanced stage of negotiation (with average maturity greater than 12 years) approved after June 30, 2010, borrowers have the option to request a reduction of the average maturity prior to loan signature. The pricing change will not apply to operations scheduled for approval before June 30, 2010.

Pricing and Application of the Premium

The premium, which is a component of the spread the Bank charges over LIBOR, applies to both fixed and variable spread options of the IBRD Flexible Loan (IFL), as well as to IBRD guarantees on a loan-equivalent basis. (1) The following lending rates will apply to IFLs in US dollars approved after June 30, 2010:

Average Maturity
Variable Spread (2)
Fixed Spread (3)
Up to 12 years
LIBOR + 0.24%
LIBOR + 0.60%
Greater than 12 to 15 years
LIBOR + 0.34%
LIBOR + 0.90%
Greater than 15 to 18 years
LIBOR + 0.44%
LIBOR + 1.25%

(1) For pricing for loans with a Deferred Drawdown Option (DDO), please refer to IBRD lending rates information on the World Bank Treasury website.
(2) The Variable Spread is recalculated every January 1 and July 1.  Variable spreads as shown above are based on the applicable spread for the interest period between January 1, 2010 and June 30, 2010 to illustrate the impact of maturity premiums on IFLs with a variable spread approved after June 30, 2010.  Applicable spreads for the interest period between July 1, 2010 and Dec. 31, 2010 will be posted on the IBRD lending rates information page on the World Bank Treasury website.  There is no differentiation in variable spreads for loans in US dollars, Euros and Japanese yen.
(3) The Fixed Spreads shown apply to loans in US dollars and Euros.  Fixed spreads for loans in Japanese yen are currently 0.10% lower than those shown above for all maturities.

For more information about these changes, please send us an email at FAB@worldbank.org.