BEST SUPRANATIONAL ISSUE: World Bank’s euro debut
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BANKING

BEST SUPRANATIONAL ISSUE: World Bank’s euro debut

Deals of the Year


Issuer: World Bank
Date: August 1998
Amount: €500m ($580 million)
Bookrunner: Nomura


This seven-year €500 million ($580 million) issue was the World Bank’s first standard euro-denominated bond. It was also the first offering in euros by a supranational organization not based in Europe and provided a welcome new pricing comparison. The World Bank saw an opportunity for low-cost borrowing, believing that Japanese investors would be willing to hold euro-denominated bonds even though the pricing was tight and spreads have widened in the secondary market since the bond was launched.

The issue was initially targeted at Japanese investors, who took 71% of bonds sold on launch, although it also enjoyed a good European follow-through. Andrew Asbury, director of fixed income syndication at Nomura, says: “At that time a lot of investors in Japan were swapping out of francs and Deutschmarks to euros and trying to increase their weight in euro products. It seemed the ideal time to price in euros.”

The deal took advantage of an arbitrage window that opened up at the seven-year maturity. It was launched at three basis points over. Although some traders thought this was a little tight, feedback from demand in Japan indicated that the deal would work between 2bp and 3bp over.


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