The World Bank (IBRD, Aaa/AAA) launched a 10-year global benchmark bond, raising USD 2 billion for sustainable development.
The World Bank doubled the initial bond offering of USD 1 billion, responding to strong demand from a diverse set of investors around the world. The bond was oversubscribed, with more than USD 2.4 billion in the order book. The transaction extends the World Bank’s benchmark maturity profile to 2027. The bond marks the return of the World Bank to the 10-year tenor for the first time since October 2016.
Joint lead managers for the bond are Barclays, BNP Paribas, Nomura and TD Securities.
The bond has a semi-annual coupon of 2.500% and a maturity date of November 22, 2027. It offers investors a yield of 2.569% (semi-annual), equivalent to 19.52 basis points over the 2.250% due November 15, 2027.
“We are very pleased to return to the market with a rare, 10-year benchmark issuance that offers investors looking for longer tenors the opportunity to support positive development outcomes. We are delighted at the very strong reception from investors around the world, and we are grateful for the continued support from the market to World Bank Sustainable Development Bonds,” said Arunma Oteh, Vice President and Treasurer, World Bank.
“The achievement of raising USD 2 billion 10-year money at the tightest level versus mid-swaps in several years should not be understated, and it is testament to the World Bank’s standing as a leading SSA issuer amongst global investors. The 10-year maturity has been a tricky access point for SSA issuers of late, and the World Bank should be commended for reacting quickly to favorable market conditions and executing a very solid benchmark transaction,” said Jamie Stirling, Head of SSA DCM, BNP Paribas.
“World Bank has concluded a rare and impressive achievement for 2017, with a true benchmark-sized new 10-year bond, executed with great precision. The deal was timed to deliver an attractive outright yield for investors and a fair spread, yet marking the tightest print of the year for an issuer in this sector, reflecting the full value of the issuer’s top rated credit – a great success for the team involved,” said Lee Cumbes, Head of Public Sector, Barclays.
“The World Bank has successfully executed the market’s tightest 10-year benchmark from a supranational borrower in over 2 years and is one of only four supranational borrowers that have managed to engage the long-end of the USD market this year. The back-up in rates and accommodative moves in swap spreads provided the perfect backdrop to engage the market for this long-end project. The USD 2 billion print is a testament to the borrower’s unparalleled investor following and has resulted in a world-class outing and globally diversified order book,” said Conrad Baker, Executive Director, Head of SSA Syndicate Nomura.
“The success of this trade once again reflects the World Bank’s ability to deliver a liquid, high-grade product to global investors. After a busy period in SSA primary markets, the World Bank timed this transaction perfectly to take advantage of the back-up in USD rates. This new 10-year benchmark is the tightest SSA print in this maturity in 2017. The high quality of the orderbook, coupled with the broad geographical mix is testament to the global investor following of the World Bank,” said Paul Eustace, Managing Director, Fixed Income Origination & Syndication, TD Securities.
World Bank Bonds Use of Proceeds
The World Bank (IBRD) issues USD 50 to 55 billion in bonds for sustainable development every year. Bond proceeds are used to support the financing of sustainable development projects and programs in countries that are middle-income or creditworthy lower-income IBRD members and working in partnership with IBRD to eliminate extreme poverty and boost shared prosperity. Projects supported by IBRD are designed to achieve a positive social impact and undergo a rigorous review and internal approval process aimed at safeguarding equitable and sustainable economic growth.