A World Bank sustainable development bond aimed at ending extreme poverty raised $5bn from a record 175 investors, including banks, central banks, insurers, pension funds and asset managers across the globe.
The transaction was the first in the Sovereign, Supranational and Agency (SSA) market in US dollars of this year, the Washington, D.C.-based lender said in a press release. The bond issuance generated “the largest order book for a World Bank 7-year bond,” on strong demand from bank treasuries, followed by official institutions and asset managers.
Jorge Familiar, vice president and treasurer of the World Bank, called the result “outstanding,” adding it was mainly due to the lender’s “75-year track record as one of the most stable and predictable bond issuers.”
“This has enabled it to build a loyal, globally diverse, and ever-increasing set of investors looking to support sustainable development in our member countries,“ Familiar said.
The International Bank for Reconstruction and Development (IBRD), known as the World Bank in capital markets, was founded in 1944 to rebuid Europe after the Second World War.
The World Bank is rated AAA/Aaa based on its capital, reserves and prudent financial policies, making its investment products an attractive prospect for long-term investors. The World Bank operates as a global development cooperative owned by 189 nations, of which the six largest shareholders are the US, Japan, China, Germany, France and the UK.
The lender is the world’s largest source of development finance and expertise, with more than 75 years of experience in financing development projects. It currently has around $240bn (€219bn) in loans outstanding to 77 countries, all aimed at supporting the UN Sustainable Development Goals and to end extreme poverty and promote shared prosperity.
Strong investor demand from Europe
The 7-year bond, which will be listed on the Luxembourg Stock Exchange, pays investors a semi-annual coupon of 4%, offering a spread of 16.7 basis points versus the reference US Treasury, with a semi-annual yield of 4.082%, the World Bank said.
Barclays Bank, BMO Capital Markets, BNP Paribas and Citigroup Global Markets acted as lead managers.
Almost half (49%) of all investor demand came from banks, bank treasuries and corporates, followed by 35% from central banks and official institutions, and 16% from asset managers, insurance companies and pension funds. More than half of all investors were from Europe (56%), followed by 26% from the Americas and 18% from Asia.
“The deal once again affirms the incredible global support from the investor base for the World Bank’s development mission,” said Alex Paterson, managing director, head of SSA DCM, at Barclays.
“A superb start to 2024 for the World Bank printing $5bn,” said Jamie Stirling, global head of SSA DCM at BNP Paribas. “With final books of $11bn, the bold decision to open the SSA USD market in 2024 with a longer dated transaction has been rewarded and set an impressive early benchmark for supranational issuance in the new year.”