Dive Brief:
- The World Bank Group announced last week it has raised $4 billion through a new seven-year sustainable development bond. The bond was issued by its subsidiary, the International Bank for Reconstruction and Development.
- The group said its bond signaled a strong demand, attracting more than $11 billion in investor orders from a diverse pool of investors. There were over 150 investor orders, which were led by banks, treasuries and corporates (43%), followed by central banks and official institutions (30%) and asset managers, insurance and pension funds (27%).
- The bond will mature in August 2033 and will support the World Bank’s goal to “mobilize capital for sustainable development,” according to an Aug. 18 press release.
Dive Insight:
The World Bank Group said the lead managers on the transaction were Bank of America, Morgan Stanley, Nomura and TD Securities.
The sustainable development bond carries a 4.50% semi-annual coupon and offers a spread of 3.9 basis points against the reference U.S. Treasury, meaning the bond offers a 0.039% higher yield compared to the reference rate. The bond will be listed on the Luxembourg Stock Exchange, per the release.
The bond, like other similar transactions issued before it, will support the World Bank’s objective of helping developing countries combat poverty by boosting their economies as they navigate multiple crises.
The group’s IBRD arm is recognized as the world’s largest development bank and provides middle-income and creditworthy low-income countries with loans, guarantees, advisory services and risk management products. IBRD’s stated goal is to help these countries reduce poverty and help organize responses to regional and global challenges, according to its website.
“The quality of the orderbook reflects investors' recognition of the World Bank's financial strength and the positive impact of the programs these bonds support,” World Bank Group Vice President and Treasurer Jorge Familiar said in the release.
Earlier this year, the World Bank said it would “retire” a goal that committed 45% of its annual financing to projects with climate benefits. The group said the previous iteration of the target — which devoted 35% of financing to such projects over a five-year period — would also be scrapped.
The walkback, announced in June, came on the heels of the international organization facing increased pressure from the Trump administration to drop the climate lending target. The World Bank set the updated 45% financing commitment in 2023 during Joe Biden’s tenure in the White House, a step up from what it had initially committed in 2020 as part of its Climate Change Action Plan.
