The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) today priced the first global benchmark issue of its new fiscal year 2020*. The 5-year Global Sustainable Development Bond raised CAD 1.5 billion from institutional investors around the globe to finance World Bank’s sustainable development lending. This transaction matches the World Bank’s largest CAD benchmark, issued in January 2019, the largest bond issued by an SSA (sovereigns, supranationals, and agencies) in the Canadian market.
BMO Capital Markets, RBC Capital Markets, and TD Securities were joint lead managers for this transaction. The bond will be listed on the Luxembourg Stock Exchange.
The CAD 1.5 billion offering enjoyed strong market reception from the onset, with indications of interest surpassing CAD1.1 billion overnight. The final orderbook was oversubscribed, with final books in excess of CAD1.85 billion. The high quality, diversified order book was reflected in the allocation to 47 investors globally.
This Sustainable Development Bond is issued as part of a World Bank initiative to engage investors on the Sustainable Development Goals (SDGs). The World Bank’s goals of ending extreme poverty by 2030 and promoting shared prosperity in a sustainable manner are aligned with the SDGs. Increasingly, investors and other market participants are using the SDGs as a framework for investment and way to communicate support for specific development priorities. Through this engagement, the World Bank and the joint lead managers seek to raise awareness of SDG 6, Clean Water and Sanitation, and SDG 14, Life Below Water.
The World Bank, as the largest multilateral funder for ocean and water projects in developing countries, is committed to working with countries to ensure access to safe and clean water and for the sustainable use of ocean and marine resources. This includes avoiding pollution reaching oceans through better waste management.
Jingdong Hua, World Bank Vice President and Treasurer, said: “We are happy to see such a robust response from investors highlighting their commitment to high quality investments that support sustainable development. Freshwater and marine ecosystems are integral to regulating climate, while also providing nutrition, jobs, and livelihoods. Through our partnership with investors we want to sharpen the focus on these challenges and highlight the essential role investors play in achieving the Sustainable Development Goals.”
Joint Lead Manager Quotes
Sean Hayes, Managing Director, Head of US Syndicate at BMO Capital Markets, said: “World Bank has kicked off its new fiscal year with a splash in Canadian dollar markets, a Sustainable Development Bond highlighting water and oceans. The premier international SSA issuer in CAD markets for its liquidity, it follows January’s C$1.5bn 3-year with a largest ever in the 5-year tenor. The size and spread achieved is a true testament to both the Canadian domestic and global investor following World Bank attracts.”
Jigme Shingsar, Managing Director SSA DCM at RBC Capital Markets, said: “A spectacular return to the Canadian dollar market for World Bank who once again demonstrated the broad investor appeal of Sustainable Development Bonds. That the “Water and Oceans” theme for this Sustainable Development Bond aligned so well with Canada was just icing on the cake.”
Paul Eustace, Managing Director, Head of EMEA Syndicate at TD Securities, said: "World Bank has demonstrated market leading presence in the Canadian dollar market with this new sustainable development bond. This bond highlights the lending activity of World Bank to support oceans and water, a theme that resonates meaningfully with Canadian investors. We congratulate the World Bank on an exceptional beginning to their funding for the 2019-20 fiscal year."
With annual issuances between US$50-US$60 billion, World Bank bonds support the financing of programs that support the SDGs. World Bank bonds are aligned with the sustainability bond guidelines published by the International Capital Markets Association (ICMA). The World Bank is also a member of the Executive Committee of the Green Bond and Social 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 fiscal year begins on July 1.
