World Bank Prices Its First SOFR-Linked Floating Rate Bond of 2023

The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) priced a USD 1.75 billion Sustainable Development Bond linked to the Secured Overnight Financing Rate (SOFR) maturing on January 12, 2027.

The transaction attracted over 35 orders totaling nearly USD 2 billion from a diverse set of investors seeking a high credit quality investment while supporting sustainable development. The 4-year SOFR-index linked note pays a coupon of Compounded SOFR + 37 basis points. BMO Capital Markets, Scotiabank, and Wells Fargo Securities are the lead managers for the transaction. The bond will be listed on the Luxembourg Stock Exchange.

Jorge Familiar, Vice President and Treasurer, World Bank, said, “We are pleased to launch this first SOFR floating rate transaction of 2023 and remain committed to the development of the SOFR market. We thank investors for their support of the World Bank’s sustainable development mandate and strong showing in this important and growing market.”

Investor Distribution

Joint Lead Manager Quotes

Sean Hayes, Managing Director & Head, US Syndicate & Credit Sales, BMO Capital Markets, said, “The World Bank cements their status as a leader in the US dollar market with an outstanding SOFR floating rate note (FRN) print as their first US dollar benchmark of 2023. At $1.75 billion the deal marks the largest 4-year SOFR FRN new issue in the Sovereign, Supranational, and Agency (SSA) sector, and demonstrates the depth of demand for high-quality floating rate assets. The transaction achieved a high-quality distribution with an oversubscribed orderbook and attracted new investors to the FRN format. Congratulations, World Bank, on an exceptional US dollar return.”  

Cesare Roselli, Global Head of SSA Origination, Scotiabank, said, “Scotiabank is proud to support the World Bank in its first US dollar-denominated transaction of 2023: a highly successful SOFR-linked Sustainable Development Bond and the first FRN issue that the SSA market has seen this year. This transaction illustrates the World Bank’s standing as the leading USD SOFR issuer in the SSA market and its commitment to sustainable development.”

Carlos Perezgrovas, Head SSA Origination, Wells Fargo Securities, said, “No better way to start the year for the World Bank than by delivering an oversubscribed and well-placed US dollar benchmark transaction. It also marks the return of the SOFR FRN primary market that had been absent for months. Congratulations on a USD 1.75 billion trade done at a level in line with fixed rate secondaries. A complete success for the World Bank team!”

Transaction Summary

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.

Source – World Bank