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World Bank Raises USD 4.25 billion in a Dual-Tranche Transaction that Offers Investors 3-Year and 10-Year USD Benchmarks

Washington DC, October 20, 2016 - The World Bank (IBRD, Aaa/AAA) today priced a dual tranche transaction raising a total of USD 4.25 billion through USD 3 billion 3-year and USD 1.25 billion 10-year global benchmark bonds.

The transaction extends the World Bank’s benchmark maturity profile to 2026, whilst also focusing on the 3-year maturity to respond to continued demand for World Bank bonds in the short end of the USD curve.  Both bonds were oversubscribed - the 10-year book closed with investor orders over USD 2.3 billion and the long 3-year book closed with investor orders exceeding USD 4.3 billion.

Joint lead managers for this global bond are Bank of America Merrill Lynch, BNP Paribas, Citi and Nomura.

The long 3-year benchmark has a semi-annual coupon of 1.125% and a maturity date of November 27, 2019.  It offers investors a yield of 1.195% (semi-annual), equivalent to 22.7 basis points over the 1.000% U.S. Treasury due October 15, 2019. The 10-year benchmark has a semi-annual coupon of 1.875% and a maturity date of October 27, 2026. It offers investors a yield of 1.975% (semi-annual), equivalent to 23.3 basis points over the 1.500% due August 15, 2026.

“With this successful dual-tranche transaction, investors have seized the opportunity to invest in liquid and safe 3- and 10-year products offered by the World Bank. World Bank bonds allow investors to earn good returns and at the same time support our twin goals of eradicating extreme poverty and boosting shared prosperity. The 10-year benchmark bond marks our successful return to the long end of the curve, since our lastone in over a year. The extremely strong investor demand for the bonds, has allowed the World Bank to achieve excellent results, with broad diversification in terms of geography and investor type,” said Arunma Oteh, Vice President and Treasurer, World Bank.

Investor Distribution of the USD 3 billion 3-year USD Benchmark:

Distribution by Geography Distribution by Investor Type
US 43% Central Banks / Official Institutions 56%
Asia Pacific 38% Asset Managers / Pension / Insurance 29%
Europe 14% Bank Treasuries / Banks / Corporates 15%
Middle East and Africa   3%    
Non-US Americas   2%    

Investor Distribution of the USD 1.250 billion 10-year USD Benchmark:

Distribution by Geography Distribution by Investor Type
Asia 46% Central Banks / Official Institutions 42%
Europe 25% Asset Managers 34%
US 16% Banks / Corporates 20%
Non-US Americas 10% Pension / Insurance   4%
Middle East and Africa   3%    

Transaction Summary:

Issuer:
World Bank (International Bank for Reconstruction and Development, IBRD)
Issuer rating:
Aaa /AAA (Moody's / S&P)
Maturity:
3-year
10-year
Amount:
USD 3 billion
USD 1.25 billion
Settlement date:
27 October 2016
October 27, 2016
Coupon:
1.125%
1.875%
Coupon payment dates:

Each May 27 and November 27,
short first coupon on
November 27, 2017

Each April 27 and October 27,
commencing on April 27, 2017

Maturity date:
27 November 2019
October 27, 2026
Issue price:
99.789%
99.097%
Issue yield:
1.195%
1.975%
ISIN:
US459058FS77
US459058FT50
Listing:
Luxembourg Stock Exchange
Clearing systems:
Fedwire, Euroclear, Clearstream

Joint lead managers:
BofA Merrill Lynch, BNP Paribas, Citi, Nomura
Senior Co-lead managers:
Banca IMI, BMO Capital Markets, Deutsche Bank, TD Securities
Junior Co-leads:
Barclays, Castle Oak, Credit Agricole, Goldman Sachs, HSBC, InCapital, JP Morgan, Messirow, Mizuho, Morgan Stanley, Societe Generale, Royal Bank of Canada, Wells Fargo


Joint lead manager quotes:

“The World Bank has once again used the dual tranche to great effect. They have managed to access a well-diversified range of investors with different needs, and been rewarded with good placement, pricing and duration. Congratulations to the team,” said Adrien de Naurois, SSA Syndicate, BofA Merrill Lynch.

“The ability of the World Bank to raise sizeable volume in the USD market has almost become the norm in recent years. However the Treasury’s continuous strategy of targeting issuance to appeal to current investor demand is well illustrated in this transaction as the World Bank team was able to price both the 3-year and 10-year tranches flat to the World Bank’s curve, illustrating their ability to raise size at impressive levels,” said Jamie Stirling, Head of SSA DCM, BNP Paribas.

“A fantastic dual tranche transaction from the IBRD, capitalizing on the strong demand and tight spreads in the front end of the USD curve as well as taking advantage of the steep curve and the rare opportunity to issue in 10 years. The combined order book was over USD 6 billion with over 100 investors participating, reflecting the strength of IBRD’s franchise with the global rates investor community,” said Philip Brown, Head of Public Sector Capital Markets, Citi.

“World Bank continued their impressive run of USD benchmarks this year, with this well timed dual tranche offering targeting both ends of the USD yield curve. Few issuers in the SSA space can achieve a combined deal size of USD 4.25 billion in one outing, underscoring World Bank’s strong following among the global investor community and a testament to its extensive and ongoing marketing effort,” said Conrad Baker, Executive Director, Head of SSA Syndicate Nomura.

The present transaction is consistent with the World Bank’s longstanding practice of deploying its franchise as an issuer in the international capital markets to offer investor’s high-quality, liquid instruments.  This approach has direct benefits for World Bank member countries as well, since as a cooperative institution it is able to fund its activities as a provider of financial services to its members on highly attractive terms.


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 Group has two main goals: to end extreme poverty and promote shared prosperity. The World Bank (IBRD) 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. The World Bank has been issuing sustainable development bonds in the international capital markets for over 60 years to fund its activities and achieve a positive impact. Information on bonds for investors is available on the World Bank Treasury website: www.worldbank.org/debtsecurities.


 

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