World Bank Prices Successful US$3.5 Billion 5-Year Global Benchmark Bond for Sustainable Development | WPN World People News

The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA), on August 22, priced its first USD benchmark issue for its new fiscal year, with a USD 3.5 billion 5-year global benchmark due August 28, 2024. There were orders for over USD 4.6 billion from over 90 investors from more than 20 countries. The order book was anchored by bank treasuries and central banks from 21 countries. Other investors included official institutions, corporates, asset managers, as well as pension and insurance funds.

Joint lead managers for this global bond are Barclays, J.P. Morgan, Morgan Stanley and TD Securities.

The 5-year benchmark has a semi-annual coupon of 1.5% per annum and a maturity date of August 28, 2024. It offers investors a yield of 1.526%, equivalent to 7.9 basis points over the 1.75% UST due July 31, 2024.

“This is the World Bank’s first USD global transaction of the fiscal year. We are very pleased to offer investors a safe and liquid product that enables them to achieve a positive social and development impact with their investment. We are delighted with the results and appreciate the support from investors and our financial partners for the World Bank’s sustainable development mandate”, said Andrea Dore, World Bank Head of Funding.

Joint lead manager quotes:

“The World Bank has commenced the 2019/20 financial year with a fantastic first USD benchmark, reopening the market after a sustained period without benchmark supply. To generate a large, high quality order book, at a spread very close to US Treasuries is impressive, not to mention in a backdrop of volatile markets and negative swap spreads. The achievement in testing conditions is a great reflection of the World Bank’s position as a market leader,” said Lee Cumbes, Head of Public Sector EMEA, Barclays.

“The World Bank takes the lead in reopening the USD primary market post-summer in the core SSA space: Despite ongoing market volatility, an inverted yield curve and rich valuations, the issuer was quick to react to recent favorable swap spread movements and market stability to print a USD3.5bn 5-year global benchmark. Well done to the World Bank team for taking the leadership position in a challenging market!” said Keith Price, Managing Director, Head of Primary Frequent Borrowers, JP Morgan.

“The World Bank’s first USD benchmark of its 2020 fiscal year was the first supranational benchmark issue to come to market since a period of protracted macro volatility through the summer. Given the sharp moves we have witnessed in swap spreads, it needed a pre-eminent issuer like the World Bank to kick-start the USD SSA market, and establish new market standards in primary issuance. Despite the highly compressed spread to US Treasuries, investors treated the World Bank’s return to the market like the welcome arrival of an old friend. The size of this deal demonstrated the World Bank’s continued appeal to customers across the globe as a safe-haven asset in uncertain times, as well as the World Bank’s ability to dynamically and proactively respond to market conditions and investor feedback. The success of this transaction further underscores the World Bank’s continued pre-eminent status as one of the SSA market’s flagship borrowers,” said Navindu Katugampola, Head of SSA Origination, Morgan Stanley.

“Amidst a volatile, new yield environment, the World Bank has demonstrated market leadership with the first USD benchmark of their new fiscal year. This transaction demonstrates the World Bank's excellent ability to measure investor sentiment when it comes to pricing in the USD benchmark market. The size and quality of the order book reflect the global following of the World Bank name among fixed income investors looking for triple-A-rated paper,” said Laura O’Connor, Director, TD Securities.

The World Bank issues between USD 50 billion and USD 60 billion annually in bonds for sustainable development. These range from structured notes to benchmark-sized issuances that support the financing of the World Bank’s sustainable development projects and programs. A key priority for the World Bank’s engagement in the capital markets is to build strategic partnerships with investors and other market participants to raise awareness for development challenges and accelerate opportunities to mobilize finance for development.

Source: World Bank