By Marisa Wong
Morgantown, W.Va., Aug. 31 – The International Bank for Reconstruction and Development (World Bank) priced on Wednesday the first special drawing rights (SDR)-denominated bond in China’s interbank bond market. The World Bank raised 500 million SDRs, which is equivalent to about $700 million, from the 2016 series 1 bonds, according to a press release.
The three-year bonds are priced at par to yield 0.49%. All payments will be made in renminbi.
The bonds were issued under the World Bank’s SDR-denominated issuance program approved on Aug. 12 by the People’s Bank of China. The program has a total size of SDR 2 billion, or roughly $2.8 billion.
Industrial and Commercial Bank of China Ltd., HSBC Bank (China) Co. Ltd., China Construction Bank Corp. and China Development Bank Corp. are the joint lead managers.
The bonds were 2.5 times oversubscribed with around 50 orders, 53% of which were from bank treasuries, 29% from central banks and official institutions, 12% from securities companies and asset managers and 6% from insurance companies.
“We are honored to support China in its efforts to internationalize its capital and currency markets through the launching of an SDR bond issue and the new Mulan market,” Arunma Oteh, World Bank vice president and treasurer, said in the press release.
“It is truly a pleasure for the World Bank to be the first to offer investors an opportunity to participate in this innovative investment product that supports sustainable development worldwide. We are grateful for the excellent collaboration with the Chinese authorities and financial partners.”
The law firm of King & Wood Mallesons (Hong Kong and Beijing) acted as counsel for the World Bank on the bond issue.
World Bank (Aaa/AAA) is based in Washington, D.C.
| Issuer: | International Bank for Reconstruction and Development
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| Issue: | SDR-denominated, renminbi-settled bonds, 2016 series 1
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| Amount: | 500 million SDRs
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| Maturity: | Sept. 2, 2019
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| Underwriters: | Industrial and Commercial Bank of China, Ltd. (lead); HSBC Bank (China) Co. Ltd. (co-bookrunner); China Construction Bank Corp. and China Development Bank Corp. (joint lead)
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| Syndicate members: | Agricultural Bank of China Ltd., Bank of China Ltd., Bank of Communications Co., Ltd., China Merchants Bank Co., Ltd., Export-Import Bank of China, Bank of Ningbo Co. Ltd., Bank of Hangzhou Co., Ltd., China International Capital Corp. Ltd., Citic Securities Co. Ltd., Donghai Securities Co., Ltd., MUFG and Citibank (China) Co., Ltd.
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| Coupon: | 0.49%
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| Price: | Par
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| Yield: | 0.49%
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| Offer period: | Aug. 31-Sept. 2
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| Settlement date: | Sept. 2
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