Daiwa Securities Group offers the first CER-Linked Uridashi Bond Created in Collaboration with the World Bank
Tokyo, June 9, 2008 - Daiwa Securities Group and the World Bank announced that they have launched the market’s first Certified Emission Reduction (CER*) Linked Uridashi Bond. The issuer for the bonds is the World Bank (International Bank for Reconstruction and Development - IBRD, rated Aaa/AAA). The USD denominated bond offers investors 100% principal protection in USD. It will have a fixed rate coupon for an initial period, and then a coupon linked to the future performance of CER market prices and the actual versus estimated delivery of CERs that will be generated by a hydropower plant located in the Guizhou Province in China.
By purchasing this bond, investors can indirectly participate in the market for greenhouse gas emission reductions. Investors will also be supporting demand for CERs generated from a specific UNFCCC-registered clean energy project. The market for CERs contributes to a reduction of global greenhouse gas emissions and the transition to a low carbon growth economy.
In the Japanese market, this issue will be referred to as the “CO2L Bond (**)”, or, the “’Cool’ Bond”.
This is the first Uridashi that references the emission reductions generated from a specific project under the framework defined by the Kyoto Protocol. The issue is underwritten by Daiwa Securities SMBC Europe Limited, arranged by Daiwa Securities SMBC Co. Ltd., the wholesale securities firm under Daiwa Securities Group, and distributed by Daiwa Securities to Japanese investors.
The World Bank and Daiwa Securities Group are each committed to providing products that respond to investors looking for investment opportunities that contribute to sustainable development.
Mr. Eishu Kosuge, Chairman & CEO of Daiwa Securities SMBC Europe Ltd commented, “We are delighted to be involved in this ground-breaking bond issue. This gives Japanese retail investors an excellent opportunity to participate in this international initiative to help the environment. I know that this is the result of long and patient preparation by the World Bank to create a new product and I congratulate them on their efforts. I would also like to acknowledge the hard work of my colleagues at Daiwa SMBC in support of this.”
Mr. Kenneth Lay, Vice President and Treasurer of the World Bank said, “A key feature of this bond is that it gives Japanese individual investors the means, via a high credit quality investment, to participate in the success of China's efforts to reduce carbon emissions. It’s been a privilege to work with Daiwa SMBC on this innovative transaction.”
Summary terms of the bond
Description: CER Linked USD denominated Uridashi Bond
Amount: USD 25 million
Settlement Date: June 26, 2008
Maturity Date: September 30, 2013
Offering period: 9th June 2008 - 24th June 2008
Coupon: After an initial 15-month period with a fixed coupon of 3%, the note will pay a variable interest rate The variable rate is linked to the future performance of CER market prices and the actual versus estimated delivery of CERs that will be generated by a hydropower plant located in the Guizhou Province in China.
Denomination: USD 100,000.00
Clearing system: Euroclear
Listing / Law: Unlisted / English Law
* ”CER” means a unit representing one ton of CO2 equivalent issued in accordance with Article 12 of the Kyoto Protocol.
** “CO2L” and “CO2L Bond” are the registered trademarks of Daiwa Securities SMBC Principal Investments Co. Ltd
About the World Bank
The World Bank is a global development cooperative owned by 185 member countries. Its purpose is to help its members achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global problems in economic development and environmental sustainability. The goal is to help overcome poverty and improve standards of living for people worldwide. The International Bank for Reconstruction and Development (IBRD), rated Aaa/AAA, is the oldest and largest entity in the World Bank Group and provides funding, risk management tools and credit enhancement to sovereigns. To fund this activity, IBRD has been issuing debt securities in the international capital markets for 60 years.
The World Bank's bond products and investor presentation can be accessed through the website of the World Bank for bond investors (www.worldbank.org/debtsecurities). For a list of selected bonds issued recently by the World Bank, see: http://treasury.worldbank.org/recentissues.
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