WASHINGTON, D.C., July 26, 2019 – The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) today priced its second ever SOFR transaction, and the market’s longest ever bond referencing the Secured Overnight Financing Rate (SOFR). The 5-year USD-denominated bond will raise USD 500 million from global investors, and also extended the maturity of the SOFR bond market from three years to five years.
This World Bank bond transaction responds to investor demand for high quality assets and helps develop the market for SOFR – a rate based on transactions in the U.S. Treasury repurchase market and an alternative reference rate to USD LIBOR.
The bond matures on August 6, 2024 and has a coupon of Compounded Daily SOFR + 30 basis points (resetting daily and paid quarterly). Citi and TD Securities are the joint lead managers of the transaction.
“We are very happy to see the SOFR market continue to evolve, thereby strengthening the global financial system. Today’s transaction is an important step in developing robust alternatives to LIBOR. This World Bank bond extends the current SOFR curve to 5 years, which further develops this market and creates more options for investors,” said Jingdong Hua, World Bank Vice President and Treasurer.
Investor Distribution
By Geography | By Investor Type | |||
US | 59% | Banks/Bank Treasuries | 90% | |
Europe | 41% | Asset Managers | 10% | |
Joint Lead Manager Quotes
“We are delighted to be involved in this landmark World Bank transaction. This 5-year bond is the longest SOFR floating rate note issued to date and provides a high-quality asset for investors looking to manage liquidity through future Libor transition. Congratulations to the World Bank team on another successful milestone in the development of the SOFR market” said Laura O’Connor, Director, TD Securities.
“The World Bank puts itself at the forefront of capital markets by pricing the first ever 5-year SOFR-linked transaction. Investors are getting more familiar with SOFR-linked instruments; however, the bulk of issuance has been concentrated in the short end until now. The success of this transaction solidifies the World Bank’s position as a leader in the development of the SOFR market. Citi is delighted to be part of this transaction” said Philip Brown, Head of Public Sector Debt Capital Markets, Citi.
Transaction Summary*
Issuer: | World Bank |
Issuer rating: | Aaa /AAA |
Tenor: | 5-year |
Notional amount: | USD 500 million |
Issue price: | 100% |
Settlement date: | August 6, 2019 |
Maturity date: | August 6, 2024 |
Coupon: | Compounded Daily SOFR + 30 bps, reset on each U.S. Government Securities Business Day, paid quarterly with a 5-day observation lag, Act/360 |
Floating rate reference: | Compounded Daily, as defined in the final terms, and subject to the fall-back provisions therein |
Coupon payment dates: | Paid quarterly on February 6, May 6, August 6, and November 6 of each year, from and including November 6, 2019 to and including the maturity date |
Listing: | Luxembourg Stock Exchange |
Clearing systems: | Fedwire, Euroclear, Clearstream |
ISIN: | US459058HC08 |
Joint lead managers: | Citi, TD Securities |
*This press release is not an offer for sale of bonds of the International Bank for Reconstruction and Development ("IBRD"), also known in the capital markets as "World Bank". Any offering of the bonds will be made only by means of a prospectus containing detailed information that will be made available through the joint lead managers and is subject to restrictions under the laws of several countries. Bonds may not be offered or sold except in compliance with all such laws.
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.
About the World Bank
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization. Created in 1944, it is the original member of the World Bank Group and operates as a global development cooperative owned by 189 nations.
The World Bank provides loans, guarantees, risk management products, and advisory services to middle-income and other creditworthy countries to support the Sustainable Development Goals and to end extreme poverty and promote shared prosperity. It also provides leadership to coordinate regional and global responses to development challenges.
The World Bank has been issuing sustainable development bonds in the international capital markets for over 70 years to fund programs and activities that achieve a positive impact. More information on World Bank bonds is available at http://treasury.worldbank.org.
Contact
Heike Reichelt
World Bank Treasury
debtsecurities@worldbank.org
