In the face of COVID-19’s rapid global spread, the World Bank accessed the capital markets to raise funds to support its member countries, at a moment when cautious investors were looking for signs of confidence in an uncertain market. Barclays participated as a joint lead manager on a record-breaking US$8 billion Sustainable Development Bond for the World Bank, officially called International Bank for Reconstruction and Development (IBRD).
The World Bank's mission is to eradicate extreme poverty and build shared prosperity in developing countries. As the coronavirus pandemic continues to create stark challenges for communities and economies around the world, the World Bank is taking proactive steps to meet them head on. This landmark issuance is a key part of the bank's strategy to provide financing to member countries while raising awareness for their overall goals and activities.
As COVID-19 started spreading, it was clear the World Bank needed to take action on a global scale and continued raising funds in the capital markets to do so.Heike Reichelt, Head of Investor Relations and New Products, World Bank
The World Bank Group announced that it could provide up to US$160 billion in financing, over a period of 15 months, for the immediate and longer-term health, social and economic impacts of COVID-19, with about a third of that from the World Bank (IBRD). With global investors remaining conservative, The World Bank’s timing for its record-breaking bond fit well and gave investors an opportunity to invest in a Triple-A, liquid product from a global organisation that is helping address the global health and resulting economic crisis.
Thanks to careful preparation, the quality of the bond, and the long-term working relationship between Barclays and the World Bank, the transaction was executed successfully. There was unprecedented interest from investors, which resulted in a record-breaking order book of US$12.5 billion and the World Bank issuing a US$8 billion 5-year Sustainable Development Bond.
In a time of unprecedented global crisis, having the chance to be part of a deal that can help to reach developing countries all over the world as they tackle the effects of COVID-19 is very meaningful.Alex Paterson, Director, Sovereigns, Supranationals, Agencies and Regions Origination, Barclays
In difficult times, investors look for confidence in returns, and developing countries look for the same in the organisations that exist to support them. So, it was important that the World Bank and Barclays could demonstrate that this bond would meet the needs of both groups.
In addition to the World Bank’s strategic approach to the terms and timing of the transaction, the World Bank’s long-established mission, reputation, and Triple-A rating made the bond extremely attractive. As a result, 190 investors, 63% of which includes central banks and official institutions, as well as asset managers and pension funds made up the initial order book. This level of demand led to the bond being finally priced at around twice the originally expected amount, making it the largest ever US$ issuance by a supranational.
The transaction was part of the World Bank’s issuance program that supports the financing of sustainable development projects and programs in its member countries. At this critical moment, the World Bank is supporting its members as they work to prevent, detect, and respond to the rapid spread of COVID-19, as well as to strengthen health systems, and sustain economies for the long-term.
We knew how important it was for the World Bank that they could rely on us to help them manage such an important and significant deal in unprecedented circumstances. We’re honoured to have been able to play our part in executing financing solutions during the crisis.Lee Cumbes, Managing Director, Head of Public Sector Debt EMEA, Barclays
Current World Bank projects and programs include US$20 million to support Ecuador’s response plan, including to provide medical care with a focus on prevention and strengthening the national public health system, US$40 million as part of a program in Lebanon to finance the procurement of equipment and training of health workers and front-line responders, and US$1 billion in India to purchase testing kits, medical equipment, medicines, and set up new isolation wards and increase infection prevention and control measures.
The International Finance Corporation is using the capital markets to support private companies and sustain economies impacted by the global COVID-19 pandemic.
The AIIB has bold plans to boost economic growth, reduce inequalities and improve living conditions for millions across Asia, so is laying the foundations in the debt capital markets, to help fund the infrastructure required.