World Bank USD 2.5 Billion 5-Year Bond Mobilizes Finance for Sustainable Development

The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) priced a 2.5 billion 5-year Sustainable Development Bond maturing in July 2026. The deal attracted a wide variety of investors with more than 75 orders and an order book reaching over $3.1 billion with strong demand from central banks and official institutions. Investors included those integrating Environmental, Social and Governance (ESG) criteria in their investment process, as well as those seeking to achieve positive impact through the selection of issuers, like the World Bank, that incorporate climate action and sustainability throughout their operations.

BofA Securities, Citi, J.P. Morgan, and Nomura are the lead managers for the transaction. The bond will be listed on the Luxembourg Stock Exchange.

Against a market tightening backdrop, the bond priced at a spread vs. the reference US Treasury of +13.55 basis points, resulting in an equivalent annual yield of 0.963%.

“We are grateful to the investors in today’s issue, and all who support the World Bank’s mission through the purchase of its bonds,” said Jingdong Hua, Vice President and Treasurer, World Bank. “Their investment leverages World Bank shareholders’ capital to mobilize financing in support of sustainable development to achieve positive environmental and social impact, including critical COVID-19 response projects and programs.”

Investor Distribution

By Geography By Investor Type
Asia 45% Central Banks/Official Institutions 63%
EMEA 38% Banks/Bank Treasuries/Corporates 19%
Americas 17% Asset Managers/Insurance/Pension Funds 18%

Lead Manager Quotes

“On this transaction, the World Bank demonstrated once again its strong sponsorship from the global investor base, particularly central banks and official institutions. In a difficult market backdrop, they succeeded in securing over 60% of support from this investor segment. This US dollar benchmark rounds off an incredible series of seven-dollar financings for a total of US dollar 40 billion from the funding team over the fiscal year,” said Adrien de Naurois, Managing Director & Head of EMEA Investment Grade Syndicate, BofA Securities.

“We are delighted to be involved in one of the World Bank’s final US dollar benchmark outing for their 2020/21 fiscal year and first 5-year benchmark since October 2020. With this transaction, the World Bank has achieved their tightest pricing spread vs. mid-swaps since 2018 and one of the lowest Treasury spreads in the sector year-to-date. This transaction comes near the end of the World Bank funding year in the public USD market, and caps a series of landmark issues. Congratulations to the World Bank Treasury team on the success of their dollar funding program this year,” said Philip Brown, Head of SSA DCM, Citi.

“The World Bank remains a market leader in US dollar Sovereign, Supranational and Agency (SSA) issuance since the pandemic started, having now issued its seventh US dollar fixed rate benchmark in the 2020-2021 fiscal year. The USD 2.5 billion Sustainable Development Bond was priced at IBRD’s tightest mid-swap reoffer spread for the 5-year tenor since 2018. J.P. Morgan was proud to again partner with the World Bank team in this important funding exercise, whose net proceeds will go towards achieving the World Bank’s twin goals of eliminating extreme poverty and promoting shared prosperity,” said Keith Price, Head of Frequent Borrower Group, J.P. Morgan.

“In what has been an extraordinary period of unprecedented market conditions, the World Bank continues to demonstrate broad market access supported by the highest quality real money investors. In today’s trade, central banks and official institutions continued their strong run of dominating the orderbooks (63%), ably supported by the usual granular participation of real money, especially from the United States where the World Bank continues to be held in particularly high esteem. This reflects not just the World Bank’s top tier credit quality but more importantly a continued investor relations effort to engage and educate investors,” said Spencer Dove, Head of SSA DCM, Nomura.

Transaction Summary

Issuer: World Bank (International Bank for Reconstruction and Development, IBRD)
Issuer rating: Aaa /AAA
Amount: USD 2.5 billion
Settlement date: May 25, 2021
Maturity date: July 15, 2026
Issue price: 99.559%
Issue yield: 0.963% semi-annual
Denomination: USD 1,000
Coupon: 0.875% p.a., payable semi-annually in arrear
Listing: Luxembourg Stock Exchange
ISIN: US459058JX27
Clearing system: Fedwire, Clearstream, Euroclear
Lead managers: BofA Securities, Citi, J.P. Morgan, Nomura
Senior co-lead managers: Castle Oak, Daiwa

For more information on the World Bank Group and COVID-19: www.worldbank.org/en/who-we-are/news/coronavirus-covid19

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