World Bank Prices USD 2 Billion SOFR Index-Linked Sustainable Development Bond as Part of its Initiative to Highlight Climate Action
The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) priced a 2 billion 7-year Sustainable Development Bond maturing in November 2028. This transaction is part of the World Bank’s initiative to issue Sustainable Development Bonds while highlighting the urgency of mainstreaming climate action.
Since announcing the initiative, the World Bank has been engaging with investors to explain how its bonds support the financing of projects that contribute to climate action and how the World Bank’s updated Climate Change Action Plan helps countries integrate climate change into their development strategies and apply climate financing in ways that achieve the most positive impact. Applying a “whole of economy” approach with developing country clients helps the World Bank mainstream climate considerations across its portfolio, including in high emitting sectors as well as sectors not typically associated with climate action such as health, education, and trade. In fiscal year 2021, which ended June 30, 2021, ninety-five percent of all IBRD projects had climate components accounting for 33% of financing.
The deal attracted over 35 orders totaling more than $2.2 billion from a diverse set of investors seeking high quality floating rate assets linked to the Secured Overnight Financing Rate (SOFR) index. The bond matures in November 2028 and pays a coupon of Compounded SOFR + 29 basis points (resetting and paid quarterly). Barclays Bank Plc, BMO Capital Markets and Wells Fargo Securities were the joint lead managers of the transaction.
“We thank investors for their tremendous response to this 7-year US dollar SOFR index-linked transaction and supporting the World Bank’s mission to end extreme poverty and reduce inequalities,” said Jingdong Hua, Vice President and Treasurer, World Bank. “These funds will support the financing of World Bank projects which are integrating climate action – mainstreamed across every sector, because it is clear that climate action and economic development must go hand-in-hand in order to achieve the Sustainable Development Goals.”
|By Geography||By Investor Type|
|EMEA||30%||Asset Managers/Insurance/Pension Funds||20%|
|Asia||9%||Central Banks/Official Institutions||1%|
Lead Manager Quotes
“Congratulations to the World Bank team on achieving another major milestone in the SSA (Sovereign, Supranational and Agency) SOFR market – the first USD 2 billion sized new issue. Achieving this size in the 7-year tenor reinforces the borrower’s status as the preeminent SSA SOFR liquidity provider. The World Bank remains firmly at the forefront of the development of this market, with each transaction drawing in an ever-wider universe of investors to the product. Barclays was honored to have supported this landmark transaction. Furthermore, with this transaction, the World Bank continues to highlight the urgency of mainstreaming climate action,” said Lee Cumbes, Head of DCM EMEA, Barclays.
“A champion of sustainability and pioneer in the development of financial markets, the World Bank continues to push forward positive change. Their latest initiative takes another step toward reframing the approach to action by mainstreaming climate throughout all investment decisions. Today’s USD 2 billion size breaks new ground in the long-dated SOFR Floating Rate Note (FRN) space, enabled by an outstanding reception from global investors in support of the World Bank’s mission. BMO was thrilled to be involved and congratulations to the World Bank on its continued leadership,” said Sean Hayes, Head of US Syndicate & Credit Sales, BMO Capital Markets.
“Without a doubt, a terrific result for the World Bank! Congratulations to the entire team for perfectly spotting the right time to execute this transaction. By far established as the largest SSA issuer in the SOFR space, the World Bank now brings the largest SOFR FRN ever done by any issuer in any maturity longer than 3 years. The transaction is also a success as it helps to further develop a growing investor base in the Americas and elsewhere for longer dated SOFR FRNs. A pleasure and an honor, as always, to be part of such high-profile benchmark,” said Carlos Perezgrovas, Head of SSA Origination, Wells Fargo Securities.
|Issuer:||World Bank (International Bank for Reconstruction and Development, IBRD)|
|Issuer rating:||Aaa /AAA (Moody’s/S&P)|
|Settlement date:||November 22, 2021|
|Maturity date:||November 22, 2028|
|Coupon||Compounded SOFR + 29 basis points|
|Compounded SOFR:||Calculated on the basis of the evolution of the value of the SOFR Index from the SOFR IndexStart value date to, but excluding, the SOFR IndexEnd value date with regard to the relevant interest period|
|Coupon payment dates:||Paid quarterly February 22, May 22, August 22 and November 22 of each year, from and including May 22, 2022, to and including the maturity date|
|Listing:||Luxembourg Stock Exchange|
|Clearing systems:||Fedwire, Euroclear, Clearstream|
|Joint lead managers:||Barclays Bank Plc, BMO Capital Markets, Wells Fargo Securities|
For more information on the World Bank and Climate Action: https://www.worldbank.org/en/topic/climatechange
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 www.worldbank.org/debtsecurities.
World Bank bonds support the financing of programs that further the Sustainable Development Goals (SDGs). World Bank bonds are aligned with the Sustainability Bond Guidelines published by the International Capital Market Association and as such support the financing of a combination of green and social, i.e., “sustainable development” projects, programs and activities in IBRD member countries as described in the World Bank Sustainable Development Bond Framework. The World Bank is also a member of the Executive Committee of the Green Bond, Social Bond, and Sustainability 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. The World Bank’s Sustainable Development Bond Impact Report describes how the World Bank engages with investors on the SDGs and raises awareness for specific development challenges.
Net proceeds of the bonds described herein are not committed or earmarked for lending to, or financing of, any particular projects or programs, and returns on the bonds described herein are not linked to the performance of any particular project or program.
This press release is not an offer for sale of securities of the International Bank for Reconstruction and Development (“IBRD”), also known in the capital markets as “World Bank”. Any offering of World Bank securities will take place solely on the basis of the relevant offering documentation including, but not limited to, the prospectus, term sheet and/or final terms, as applicable, prepared by the World Bank or on behalf of the World Bank, and is subject to restrictions under the laws of several countries. World Bank securities may not be offered or sold except in compliance with all such laws. The World Bank Sustainable Development Bond Framework and the information set forth therein are not a part of, or incorporated by reference into, the offering documentation.