US demand keeps World Bank on top of SSA pile

  • 28 Sep 2009
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The World Bank borrowed more in its latest fiscal year than it has ever before in its 64-year history — $44bn. In achieving its target, it broke plenty of new ground in terms of size, maturities, and currencies and also continued to innovate with new products to meet its goals. Brendan Dalyreports.

Never a name to have problems garnering investors’ attention, the World Bank was this year boosted by increased interest from buyers in the US.

Most strikingly, the issuer priced a $6bn three year fixed rate deal in March to affirm its status as the leading supranational issuer in the international capital markets.

The bond was the largest ever dollar deal from a supranational issuer.

More than 120 accounts placed over $7bn of orders for the deal, which was priced at 30bp over mid-swaps.

Citi, HSBC, JPMorgan and Royal Bank of Scotland were the bookrunners, and were helped by US interest stemming from the issuer’s advantages over GSE issuers.

"We’ve done more outreach with US investors, and feel that we are better known now than before. We’ll continue to speak to these investors," says Heike Reichelt, head of investor relations and new products at the World Bank in Washington DC. "One thing that has been helping us at the moment is the pick-up that US investors get when they buy us over agencies. The question is open whether US investors will be as interested in the World Bank if and when that changes."

Also in March, the borrower issued its first floating rate benchmark, a $3bn two year deal through Citi, HSBC, Morgan Stanley and RBS that pays a coupon of three month Libor plus 17.5bp.

The issuer also stretched its euro curve to 10 years when it sold a Eu3bn 10 year deal through Calyon, Credit Suisse, Deutsche Bank and Goldman Sachs in May with a spread of 43bp over mid-swaps.

It was the World Bank’s second euro global bond, following a three year deal last year.

Away from core currencies, the issuer made its Singapore dollar debut this year with a S$230m three year deal via Standard Chartered.

It also issued a number of Hong Kong dollar notes after an eight year hiatus and returned to the Swiss franc market for the first time in 12 years when it issued Sfr425m of May 2019 bonds via Credit Suisse and UBS.

The World Bank also sold one of the few Maple bonds of the year in July when it issued a C$121m ($111.5m) October 2012 bond.

The borrower has, however, faced challenges.



Troublesome basis swap

"The current level of the basis between euros and yen verus dollars hurts our goal of diversification of currencies and funding sources," says Doris Herrera-Poll, director and global head of capital markets at the Bank. "When we look at issuing in other currencies, a large basis swap is a big cost hurdle because we have to look at our after-swap cost of funding into US dollars."

The World Bank is also proud of the innovative products it has issued to achieve goals such as vaccination in third world countries and climate change mitigation.

Last November, it sold a Skr2.325bn ($328.4m) fixed 3.5% "green bond" via SEB to two pension funds and two life insurance funds, Länsförsäkringar Liv and Skandia Liv. That trade has been increased twice, bringing the total to Skr2.85bn.

The dealer then placed a $300m three year floating rate green bond with the state of California in May.

The borrower credits the proceeds of these issues to a special account funding loans to qualifying projects in its member countries. The projects will specifically support climate change solutions.

"For us this represented a very unique and trendsetting transaction," says Herrera-Pol. "It’s the first time that the Bank has earmarked proceeds to a particular sector."

The World Bank also acts as treasury manager for the International Finance Facility for Immunisation (IFFIm), which has had a busy year.

Among its issuance, IFFIm smashed its own record for the largest ever rand Uridashi when it raised $429m equivalent in May with a multi-tranche three year vaccine bond, including a R3.17bn ($310m) tranche.

IFFIm also made its UK debut with a £250m three year fixed rate bond sold in May, driven by demand from ethical investors and other real money buyers in the UK, Europe and Asia, in conjunction with a retail targeted Individual Savings Account (ISA) tranche launched in early March.

"IFFIm is quite well funded at the moment, but we’re starting to think about talking to investors in the US and in Europea again to update them on IFFIm and its funding plans," says Reichelt. "

The issuer expects more innovative products in the future.

"There’s a great deal of interest in innovative finance and applying it to the challenges of today, like climate change, that need large amounts of money" Reichelt adds. "There is a lot of thinking about taking advantage of capital markets and investor’s interest in products to solve some of the problems."

The World Bank has also been one of the most active issuers of private placements, including callable notes, but does not predict a return of structured notes any time soon.

"We are not yet seeing a resurgence of demand, and it’s hard to figure out to what extent the risk appetite will come back to the market for that sector to revive," says Herrera-Poll.

The past year has put the World Bank in a good position for the coming one.

"It depends very much how the global economy affects the borrowing for our clients, but we’re probably looking at a programme of around $30bn," says Reichelt. "We’ve pre-funded and we’ve got plenty of liquidity at the moment."

  • 28 Sep 2009

Bookrunners of Global Covered Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 UniCredit 11,957.19 82 5.36%
2 HSBC 11,812.99 65 5.29%
3 LBBW 10,602.04 69 4.75%
4 UBS 10,527.02 56 4.72%
5 Natixis 10,458.17 56 4.69%

Bookrunners of Global FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 76,957.45 328 6.18%
2 Citi 76,176.60 386 6.12%
3 Bank of America Merrill Lynch 74,603.42 292 5.99%
4 Goldman Sachs 69,690.96 577 5.59%
5 Morgan Stanley 64,371.16 356 5.17%

Bookrunners of Dollar Denominated FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 63,096.80 230 10.70%
2 Bank of America Merrill Lynch 62,492.06 243 10.60%
3 Citi 59,302.09 288 10.06%
4 Goldman Sachs 52,921.63 512 8.97%
5 Morgan Stanley 49,826.68 275 8.45%

Bookrunners of Euro Denominated Covered Bond Above €500m

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Natixis 7,713.92 29 7.27%
2 UniCredit 6,041.97 24 5.69%
3 LBBW 5,910.59 25 5.57%
4 Deutsche Bank 5,667.40 19 5.34%
5 Commerzbank Group 5,647.34 22 5.32%

Global FIG Revenue

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 02 May 2016
1 Morgan Stanley 365.83 497 7.62%
2 JPMorgan 332.66 618 6.92%
3 Bank of America Merrill Lynch 299.89 590 6.24%
4 Goldman Sachs 276.71 375 5.76%
5 Citi 264.54 592 5.51%

Bookrunners of European Subordinated FIG

Rank Lead Manager Amount €m No of issues Share %
  • Last updated
  • Today
1 HSBC 7,584.11 21 12.84%
2 Barclays 4,776.16 18 8.08%
3 Credit Suisse 4,490.78 15 7.60%
4 BNP Paribas 4,171.68 19 7.06%
5 UBS 3,877.49 18 6.56%