World Bank Returns to Kangaroo Market with a Dual-Tranche Australian Dollar Bond Offering
Washington DC, January 6, 2016 -The World Bank (International Bank for Reconstruction and Development, rated Aaa/AAA) today priced a dual-tranche Australian dollar (AUD) transaction. This transaction offers investors an increase of AUD 550 million to the existing 2.80% benchmark due January 13, 2021*, and a new 10.5-year fixed rate offering**.
The new 10.5-year fixed rate offering is the World Bank’s longest dated benchmark transaction in Australian dollars to date and extends the curve by over a year.
The AUD 550 million tap to the existing AUD 550 million bond brings the total new outstanding to AUD 1.1 billion. The increase has an issue price of 100.794% (plus accrued interest of 0.746%) to yield 2.62%. This equates to a spread of 56.75 basis points over the 5.75% Australian Commonwealth Government Benchmark (ACGB) due May 2021.
The World Bank’s new AUD 150 million long-dated benchmark has a coupon of 3.00% and matures on October 19, 2026. This was issued at 99.62% to yield 3.0425% at a spread of 58 basis points over the 4.25% Australian Commonwealth Government Benchmark (ACGB) due April 2026.
Both transactions settle on April 19, 2016.
The joint lead managers for this dual-tranche offering are ANZ, Citi and TD Securities.
The benchmark bonds were launched with an initial target minimum aggregate size of AUD 400 million and in response to the strong investor demand the transaction was upsized to an aggregate size of AUD 700 million over the two tranches.
“This dual tranche transaction fits our investor driven strategy, providing investors an option of maturities to invest in and at the same time extending our Australian dollar yield curve. We are very pleased with the results of this transaction and would like to thank the investors and our bank partners for their continued support of our development mandate,” said Andrea Dore, Lead Financial Officer, Capital Markets, World Bank.
*On July 28, 2016, IBRD increased the principal amount with a fourth tranche in the amount of AUD 700 million with an issue price of 102.859% to yield 2.12% at a spread of 55 basis points over the 5.75% ACGB due May 2021.
** On July 28, IBRD increased the principal amount with a second tranche of AUD 150 million taking the total outstanding amount to AUD 300 million with an issue price of 104.611% at a spread of 60.75 basis points over the 4.25% ACGB due April 2026.
Joint Lead Manager Quotes:
“The World Bank has responded well to the changing market dynamics and shown flexibility and responsiveness to once again achieve a fantastic result in a good market window. This successful outcome provides proof of how well received the World Bank is in the AUD market by both domestic and offshore investors,” said Harald Eikeland, Director Syndicate, ANZ.
“World Bank has demonstrated a consistent approach to the AUD market for many years now and continue to be rewarded with extremely well received transactions. By capitalising on the immediate demand in the 5 year maturity and then being receptive to the reverse enquiry for the long end transaction they have managed to secure AUD 700 million from the market in a single exercise, a feat not as easily achieved in 2016, which has generally delivered smaller transactions than in previous years,” said James Arnold, Head of Australian Dollar Syndicate, Citi.
"AUD 550 million transactions have become uncommon in the Australian SSA Kangaroo market and when coupled with a new long end tranche, it emphasizes the regard to which the World Bank is held in by AUD investors. The fundamentals, timing and pricing of this deal were optimal and ensured a positive response from investors. It was particularly pleasing to see a number of domestic accounts involved and shows the strategic approach World Bank takes to the Kangaroo market," said Tom Irving, Managing Director, TD Securities.
The notes are issued under the laws of New South Wales and documented under the World Bank's Global Debt Issuance Facility. The notes will be listed on the Luxembourg Stock Exchange, will settle through Austraclear, Euroclear and Clearstream, and are expected to qualify as eligible collateral for repurchase agreements for the Reserve Bank of Australia’s open market operations.
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 188 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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