World Bank Expands SOFR Index-Linked Market with USD 1.5 Billion Transaction
The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) priced a USD 1.5 billion 5-year benchmark bond linked to the Secured Overnight Financing Rate (SOFR) index. It is the largest SOFR Index-linked bond issued by a Sovereign, Supranational or Agency (SSA).
More than 30 investors placed orders in excess of USD 1.7 billion. The order book was anchored by bank treasuries and asset managers. Joint lead managers for this transaction were BMO Capital Markets, RBC Capital Markets and Wells Fargo Securities, LLC.
The 5-year benchmark matures on September 18, 2025 and has an interest rate of Compounded SOFR +31 basis points.
“We are very pleased to offer investors a liquid, SOFR Index-linked product from the World Bank – an issuer of the highest credit, that also enables them to achieve a positive social and development impact,” said Jingdong Hua, Vice President and Treasurer, World Bank. “The continued development of robust alternatives to LIBOR helps strengthen the global financial system, and we are grateful for the increasing number of investors joining this growing market.”
Investor Distribution
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By Investor Type
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By Region |
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| Asset Managers/Pension/Insurance | 45% | Americas | 61% |
| Banks/Bank Treasuries/Corporates | 45% | Europe | 39% |
| Central Banks/Official Institutions | 10% | ||
“Pioneering capital markets is simply what the World Bank does best. This outcome represents the largest ever SSA SOFR Floating Rate Note (FRN) new issue, albeit in a long-dated floating rate maturity, which involved new investors. Congratulations to the World Bank Treasury on reaching yet another milestone; BMO is honored to have been a partner,” said Sean Hayes, Head of US Syndicate & Credit Sales, BMO Capital Markets.
“The World Bank reinforced their status as the premier provider of term SOFR product with their latest record-breaking 5-year benchmark. With this transaction the World Bank stands out for its ability to transform longer less liquid parts of the SOFR curve into benchmark markets which will no doubt blaze the trail for others to follow,” said Jigme Shingsar, Managing Director, RBC Capital Markets.
“Congratulations to the World Bank team on achieving the milestone of issuing the largest SOFR FRN new offering by any SSA borrower to date. The high-quality book of over USD 1.7 billion in orders, allowed for a comfortable increase to the USD 1.5 billion final size and a spread tightening to +31 basis points from the original +32 basis points Initial Price Talk (IPT) level. Worth highlighting again the participation of new accounts buying SSA SOFR product for the first time, a recurring theme on each new World Bank trade. Wells Fargo is delighted to have been part of this transaction,” said Carlos Perezgrovas, Head SSA Origination, Wells Fargo Securities.
Transaction Summary
With annual issuances between US$55-US$65 billion, World Bank bonds support the financing of programs that further the Sustainable Development Goals. World Bank bonds are aligned with the Sustainability Bond Guidelines published by the International Capital Market Association. The World Bank is also a member of the Executive Committee of the Green Bond and Social Bond Principles. A key priority for the World Bank’s capital markets’ engagement is building strategic partnerships with investors to promote the importance of private sector financing in sustainable development.