IBRD Financial Products

Retired Loan Products

IBRD currently offers only one loan, the IBRD Flexible Loan or IFL with a choice of two spreads -- Fixed or Variable. The IFL consolidated the two previously offered LIBOR-based products: the Variable Spread Loan (VSL) and the Fixed Spread Loan (FSL). The IBRD portfolio includes other LIBOR based and currency pool based products which have been discontinued for new loan commitments, but are still outstanding. Loans offered by IBRD in the past include the following:

Fixed-Spread Loan (FSL): FSLs were available to all IBRD borrowers from September 1, 1999 until the IBRD Flexible Loan (IFL) was introduced in February 2008.

Variable-Spread Loan (VSL): VSLs, originally called Variable-Rate Single Currency Loan (VSCL or SCL), were introduced in 1993. They were withdrawn in February 2008.

Fixed-Rate Single Currency Loan (FSCL): FSCLs were available to IBRD borrowers to which the invitation to negotiate was issued after May 11, 1995 and before December 1, 1999. The FSCL was withdrawn in 2001.

Variable Lending Rate 1989 (VLR89) Currency Pool Loan (CPL): VLR89 CPLs were available to IBRD borrowers to which the invitation to negotiate was issued before March 1, 2001. The CPL was withdrawn in 2001.

Single Currency Pool Loan (SCP): Between September 1, 1996, and June 1, 1998, IBRD offered borrowers the option to amend the terms of their existing CPL Loan Agreements to change their currency obligation to single currency terms. 

 

Risk Management and Prepayment Options for Retired IBRD Loans

Options for Variable Spread Loan (VSL)

As of February 12, 2008, Fixed Spread Loan (FSL) and VSL are no longer available for new loan commitments. The International Bank for Reconstruction and Development (IBRD) consolidated its loan offerings, the FSL and VSL, into one product line - the IBRD Flexible Loan (or IFL).

Currency and Interest Rate Hedging: A borrower may transform the currency of denomination, the reference rate (typically LIBOR or EURIBOR) portion or the spread portion of the interest rate applicable to the obligation. To access these options a borrower must amend the relevant loan agreements. Alternatively a borrower may enter into free-standing IBRD currency or interest rate swaps by first signing a Master Derivative Agreement (MDA) with IBRD.

Interest Rate Caps/Collars: A borrower that is interested in setting limits on the reference rate portion of the interest rate may purchase a cap (upper limit) or collar (upper and lower limits) from IBRD. To access these options a borrower must amend the relevant loan agreements. Alternatively a borrower may enter into free-standing IBRD caps or collars by first signing a MDA with IBRD.

Prepayment Options: The borrower may prepay all or any part of the disbursed and outstanding loan balance at any time.

Prepayment charges may apply. The prepayment premium will consist of IBRD’s redeployment cost of the prepaid loan amount and an unwinding amount, if applicable, as reasonably determined by IBRD. The redeployment cost is derived from the difference between the contractual lending spread and maturity premium (if any) of the prepaid loan and the contractual lending spread and maturity premium (if any) in effect for loans with a variable spread in the currency of the prepaid loan at the date of prepayment. In the event of currency substitution, no prepayment fee would be charged while a substitute currency is outstanding. In the event of prepayment of amounts that were swapped under a currency or interest rate hedge, the swap will be terminated automatically and the borrower would (i) pay a transaction fee and (ii) pay, if applicable, an unwinding amount arising from the unwinding of any transaction related to any swap in effect with the borrower.

Options for the Fixed Rate Single Currency Loan

As of December 1999, Fixed-rate SCLs are no longer available for new loan commitments. A Fixed-rate SCL may be transformed to a Fixed Spread Loan (FSL) through amendments to the relevant Loan Agreements in order to introduce embedded options (currency or interest hedges, or interest rate caps and collars). The interest rate for a Fixed-rate SCL shall remain fixed as if an interest rate conversion had occurred immediately upon the Fixed-rate SCL’s transformation to an FSL. An additional fee of 0.03% per annum will apply. Alternatively, a borrower may enter into free-standing IBRD currency swaps, interest rate swaps, or interest rate caps/collars by first signing a MDA with IBRD.

Prepayment: The borrower may prepay all or any part of the disbursed and outstanding loan balance at any time. The prepayment premium is based on the cost of redeploying the full amount of the loan to be prepaid from the date of prepayment to the original maturity date. In the event of currency substitution, no prepayment fee would be charged while a substitute currency is outstanding. In the event of prepayment of amounts that were swapped under a currency or interest rate hedge, the swap will be terminated automatically and the borrower would (i) pay a transaction fee and (ii) pay, if applicable, an unwinding amount arising from the unwinding of any transaction related to any swap in effect with the borrower.

Loan Preparation Support

The Loan Choice Worksheet and instructions facilitate the borrower’s choice of suitable financial terms. The package also includes an informational letter to the borrower with a more detailed explanation of the options available. 

The worksheet serves as the basis for preparation of the applicable draft legal documentation. During the project preparation phase, Treasury recommends that the project manager send this package to the borrower's representative in charge of selecting financial terms and the Country Director.

Calculate Repayment Schedule

Calculate the repayment schedules of IBRD loans to meet specific project or portfolio needs. Determine if customized schedules fall within IBRD maturity limits (20 years average maturity and 35 years final maturity) using the Amortization Schedule Analyzer (ASA) available through Client Connection.

Client Connection is a web-based information service available to borrowers/recipients of funds from the World Bank and donors to trust funds managed by the World Bank. Client Connection allows these World Bank partners to access information related to loans, credits, grants, and trust funds through a secure, password-protected website.

Basic Instructions:

  1. Go to http://clientconnection.worldbank.org.
  2. Log in to your account.
  3. Click on the "Country Analytics" tab.
  4. Click on the "Amortization Schedule Analyzer (ASA)" tab and begin entering your information.
  5. Not registered? Go to http://clientconnection.worldbank.org, then click on "Request Registration Information" on the top, right-hand side of the screen or click on "Welcome to client Connection" for more information about the site.

Disclaimer: The Amortization Schedule Analyzer (ASA) is an analytical tool for informational purposes only provided to the World Bank's borrowers to simulate the principal amortization schedule and to calculate the weighted average maturity of a proposed loan. It does not constitute a recommendation of particular terms. Please note that the amortization schedule to be used for loan negotiations is the version produced by the World Bank Loan Department based on the Loan Choice Worksheet received from the borrower and the final amortization schedule applicable to a particular loan will be that provided in the signed Loan Agreement.