World Bank Prices 5 Billion USD 10-Year Sustainable Development Bond as part of its Initiative to Highlight Climate Action

The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) priced a 5 billion 10-year US dollar Sustainable Development Bond maturing in November 2031. This transaction is part of the World Bank’s initiative to issue Sustainable Development Bonds while highlighting the urgency of mainstreaming climate action.

Since announcing the initiative, the World Bank has been engaging with investors to explain how its bonds support the financing of projects that contribute to climate action and how the World Bank’s updated Climate Change Action Plan helps countries integrate climate change into their development strategies and apply climate financing in ways that achieve the most positive impact. Applying a “whole of economy” approach with developing country clients helps the World Bank mainstream climate considerations across its portfolio, including in high emitting sectors as well as sectors not typically associated with climate action such as health, education, and trade. In fiscal year 2021, which ended June 30, 2021, ninety-five percent of all IBRD projects had climate components accounting for 33% of financing.

The deal attracted nearly 170 orders and an orderbook reaching over USD 9.5 billion. BofA Securities, Citi, HSBC Bank plc and TD Securities are the lead managers for the transaction. The bond priced at a spread vs. the reference US treasury of + 9.4 basis points, resulting in an equivalent annual yield of 1.634%.

“Climate change threatens to reverse progress made on tackling poverty and inequality in developing countries. This 10-year US dollar Sustainable Development Bond comes at a time when we have been actively engaging investors to explain how the World Bank is working with its members to mainstream climate action in every project and across all sectors,” said Jingdong Hua, Vice President and Treasurer, World Bank. “We are extremely encouraged to hear that many investors are making progress with a holistic approach that includes integrating climate risks in their decision-making and increasing their efforts to support climate action.”

Investor Distribution

Lead Manager Quotes

“Congratulations to the World Bank team for once again demonstrating their market leading access to liquidity across the curve. A well-timed transaction met with exceptional investor demand allowing the issuer to print the largest 10-year USD benchmark from a supranational issuer. The investor reception to this transaction is furthermore a testament to the ongoing work by the World Bank to raise awareness for the need to integrate climate change considerations in all activities and decisions,” said Adrien de Naurois, Head of DCM SSA & EMEA IG Syndicate, BofA Securities.

“This was a fabulous outcome for the World Bank’s second benchmark since the summer. It is the largest ever supranational 10-year dollar bond. The World Bank’s recently launched initiative which highlights the integration of climate considerations into all World Bank lending helped to drive investor enthusiasm for the transaction. Congratulations to the World Bank Treasury team for this huge success,” said Philip Brown, Head of Public Sector DCM, Citi.

“Congratulations to the World Bank team on today’s impressive $5 billion 10-year Sustainable Development Bond – one of the tightest and largest 10-year benchmarks to date, from a supranational issuer. The final $9.5 billion+ orderbook following a 2 basis point price tightening, demonstrates once again the World Bank’s status as a leading Supranational, Sovereign and Agency (SSA) borrower. Equally important, is that the World Bank continues to set Environmental, Social and Governance (ESG) precedents within the capital markets. Most recently with recognition of World Bank’s initiative to highlight the urgency of mainstreaming climate action ahead of COP 26,” said Asif Sherani, EMEA Head of Syndicate, HSBC.

“Congratulations to the World Bank team for navigating a volatile market backdrop to successfully issue the largest supranational 10-year USD benchmark transaction of the year. This transaction attracted demand in excess of $9.5 billion, reflecting unwavering support from global fixed income investors which have also shown strong interest in the World Bank’s efforts to mainstream climate action. The TD team was delighted to be involved in this Sustainable Development Bond that will support the urgent challenges created by climate change,” said Laura O’Connor, Managing Director, Fixed Income Origination & Syndication, TD Securities.

Transaction Summary