World Bank Raises AUD 800 million Dual Tenor Benchmark Bond
March 14, 2017 – The World Bank (International Bank for Reconstruction and Development, rated Aaa/AAA) today priced a dual-tranche transaction (5 and 10-year) offering investors increases to its existing AUD 600 million 2.80% and AUD 300 million 3.00% benchmarks.
The AUD 400 million tap to the existing 5-year AUD 600 million bond brings the total outstanding to AUD 1 billion, with a coupon of 2.80% and maturity of January 12, 2022. The issue price of the increase is 99.730% (plus accrued interest of 0.526%) to yield 2.89%. This equates to a spread of 44 basis points over the 5.75% Australian Commonwealth Government Benchmark (ACGB) due July 2022.
The AUD 400 million tap to the existing long-dated 10-year AUD 300 million bond brings the total outstanding to AUD 700 million, with a coupon of 3.00% and maturity of October 19, 2026. This issue price of the increase is 95.939% (plus accrued interest of 1.261%) to yield 3.5325% at a spread of 66.25 basis points over the 4.25% Australian Commonwealth Government Benchmark (ACGB) due April 2026.
Both transactions settle on March 21, 2017.
The joint lead managers for this dual-tranche offering are RBC Capital Markets, Nomura and TD Securities.
The benchmark bonds were launched with an initial target minimum aggregate size of AUD 600 million and in response to the strong investor demand the transaction was upsized to an aggregate size of AUD 800 million over the two tranches.
“This transaction marks our first dual-tenor offering of the year offering our investors a menu of options. We are very pleased with the market's reception and successful completion of the transaction and would like to thank the many investors that participated in the deal, as well as our bank partners for their continued support of our development mandate,” said Andrea Dore, Head of Capital Markets, World Bank.
Joint lead manager quotes
“Another statement trade from the World Bank in the Kangaroo format that solidifies their position as the preeminent borrower in this market. Adding the largest 10 year tap in 4 years across all SSA borrowers is a testament to the broad investor appeal that the World Bank enjoys in all parts of the yield curve. They may come less frequently than most, but when they do come the whole market takes note. Nomura was very grateful to work on another interesting transaction from the World Bank,” said Oliver Holt, Vice President, Nomura.
“Once again the World Bank has raised the bar in the Australian capital markets by issuing a successful dual tranche offering and increasing outstandings. The 2026 tranche is the largest 10yr SSA transaction in the Australian market since August 2014. The result underscores how well their name continues to resonate with the domestic and offshore AUD investor base, and supports why the AUD market remains a strategic market for funding diversification for them. Well thought out execution, timing and responsiveness has allowed the World Bank to further cement its position as the premier issuer in this market. RBC Capital Markets is pleased to be involved in this important transaction in the Australian market,” said Daniel Chandler, Debt Capital Markets, RBC Capital Markets.
“The World Bank's dual tranche strategy was perfect for the current Australian yield curve. Through recent issuance in ACGB, Semi and SSA, we have seen a desire for investors to extend duration where they see value. This was again the case here where demand for both the mid and long end transactions was similar. This was another bellwether issue for the World Bank in AUD and one TD were extremely happy to be a part of,” said Tom Irving, Managing Director, TD Securities.
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 and the original member of the World Bank Group. It operates as a global development cooperative owned by 189 nations. It provides its members with financing, expertise and coordination services so they can achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global economic and environmental problems. The World Bank has two main goals: to end extreme poverty and promote shared prosperity. It seeks to achieve them primarily by providing loans, risk management products, and expertise on development-related disciplines to its borrowing member government clients in middle-income countries and other creditworthy countries, and by coordinating responses to regional and global challenges. It has been issuing sustainable development bonds in the international capital markets for 70 years to fund its activities that achieve a positive impact. Information on World Bank bonds for investors is available on the World Bank Treasury website:
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