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Sustainable Investment Opportunities - World...
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treasury.worldbank.org 1International Bank for Reconstruction and Development (IBRD)
1818 H Street NW
Washington DC 20433 USA
treasury.worldbank.org
WORLD BANK
Sustainable Investment Opportunities
Printed on recycled paper
treasury.worldbank.org 2International Bank for Reconstruction and Development (IBRD)
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The World Bank’s Development Activities
Financial Position of the World Bank
The World Bank in the Capital Markets
4 Annexes
Outline
treasury.worldbank.org 3International Bank for Reconstruction and Development (IBRD)
World Bank Overview
International Bank for Reconstruction and
Development (IBRD) is also known as the
“World Bank” in the capital markets
Development cooperative owned by 186
member countries
World’s largest source of financial solutions
for development
Works with members to achieve economic
growth, social and environmental
sustainability
Treasury Manager for the International
Finance Facility for Immunisation (IFFIm)
© John Isaac / World Bank
© Richard Lord / GAVI Alliance
treasury.worldbank.org 4International Bank for Reconstruction and Development (IBRD)
1. Eradicate
extreme poverty
and hunger
2. Achieve universal
primary
education
3. Promote gender
equality and
empower women
5. Improve maternal
health
6. Combat
HIV/AIDS,
malaria, and
other diseases
7. Ensure
environmental
sustainability
4. Reduce child
mortality
8. Develop a global
partnership for
development
190 world leaders adopted the UN Millennium Declaration, committing their nations to
achieving the Millennium Development Goals (MDGs). These MDGs are specific, measurable
targets which aims to reduce poverty by half by 2015.
The World Bank is one of the organizations working towards these MDGs
Millennium Development Goals
treasury.worldbank.org 5International Bank for Reconstruction and Development (IBRD)
The World Bank Group’s 6 Strategic ThemesThe following six themes designed by President Robert Zoellick guide World Bank efforts towards sustainable development and are tracked for progress
every year.
1. Poorest
Countries
2. Fragility and
Conflict
3. Middle
Income
Countries
4. Global
Public
Goods
5. The Arab
World
6. Knowledge
treasury.worldbank.org 6International Bank for Reconstruction and Development (IBRD)
World Bank Provides Financial Solutions for Members
The World Bank (IBRD) provides financing,
risk management products and other financial
services only to sovereigns or for sovereign-
guaranteed projects in countries with per
capita income over a certain level (currently
US$1,135)
Countries with less capacity to repay loans
receive long-term 40 to 50-year loans with
10-year grace periods at zero percent interest
and a 0.75% service charge or grants from
the concessional lending window, the
International Development Association (IDA)
Loans and risk management products focus
on fostering sustainable growth and poverty
reduction and are always the result of
intensive consultations between the World
Bank and the particular country partner
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treasury.worldbank.org 7International Bank for Reconstruction and Development (IBRD)
IBRD Lending in FY 2009(Total amount: US$33 billion)
Latin America and
the Caribbean
42%
Middle East and
North Africa
5%
East Asia and
Pacific
21%
South Asia
4%
Europe and
Central Asia
27%
Africa
1%
Economic
Management
6%
Financial &
Private Sector
Development
22%
Human
Development
11%
Social Protection
& Risk
14%
Trade &
Integration
9%
Public Sector
Governance
13%
Environment &
Natural
Resources
14%
Urban
Development
7%
Social
Dev/Gender
1%
Rural
Development
3%
Distribution by Theme Distribution by Region
Note: Distribution by Sector: Agriculture 5%, Education 5%, Energy & Mining 11%, Finance 12%, Health & Social Services 13%, Industry & Trade 7%, Info & Communication 1%, Law &
Public Administration 21%, Transportation 15%, Water & Sanitation 11%
treasury.worldbank.org 8International Bank for Reconstruction and Development (IBRD)
Kazakhstan – Environment
The Northern Aral Sea receded 100 km away from the
port city of Aralsk, Kazakhstan. Local fisheries
processed 4 times less than the fish production of the
1980s. Impacted fishing and agricultural industries
adversely affected unemployment and regional trade in
Kazakhstan’s poorest region of Kzyl Orda Oblast.
Thanks to the support of the World Bank funded Aral
Sea Program, the construction of an 8 mile dike in the
Aral Sea Basin is helping restore Kazakhstan’s
economy.
Today, water levels increased by 4 meters in the
Northern Aral Sea. The water distance closed in at only
25 km. Fishing production increased back to its historical
level. Trade has resumed and land production along the
Syr Darya River Basin are expected to benefit an
estimate of 1 million people of the Kzyl Orda Oblast.
Project Summary
Purpose: Northern Aral Sea Preservation
Implementation: 2001 – 2008
IBRD Financing: US$64.5 million
© Andrew C. Kircher / World Bank
IBRD Financed Project Example
treasury.worldbank.org 9International Bank for Reconstruction and Development (IBRD)
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The World Bank’s Development Activities
Financial Position of the World Bank
The World Bank in the Capital Markets
4 Annexes
Outline
treasury.worldbank.org 10International Bank for Reconstruction and Development (IBRD)
The World Bank follows very conservative financial and lending policies:
Conservative Policies
The World Bank has a policy of freezing loan
approvals and disbursements if a country fails
to pay obligations on time
It is the World Bank’s practice not to
reschedule interest or principal payments on
its loans, and the World Bank has never
written off a loan
The World Bank is highly valued amongst
borrowing nations which makes meeting
financial obligations to the World Bank a top
priority.
IBRD’s financial strength is based on five key elements
treasury.worldbank.org 11International Bank for Reconstruction and Development (IBRD)
IBRD bonds are 0% risk weighted under
BIS Basel II
The World Bank is currently owned by 186
sovereign shareholders
Total shareholder’s equity (including paid-
in capital and reserves) amounts to US$40
billion
Callable capital (US$178.4 billion) is
available upon the World Bank’s request
only to meet its obligations to its debt
holders
No call has ever been made on the World
Bank’s callable capital
Capital (US$ bn), June 30, 2009
Paid-in capital 11.5
Callable capital 178.4
Subscribed Capital 189.9
IBRD’s AAA/Aaa rating is based on a solid capital structure and financial
performance, as well as backing from its shareholders.
IBRD Capital Structure
treasury.worldbank.org 12International Bank for Reconstruction and Development (IBRD)
(a) Net of accumulated loan loss provision and deferred loan income
(b) Mostly swap payables and receivables
Assets Liabilities and Equity
US$275
Loans Outstanding(a)
US$104
Liquid Assets US$44
Other(b) US$127
US$275
Borrowings
US$110
Equity US$40
Other(b) US$125
Balance Sheet
Key Balance Sheet Items (as of June 30, 2009, billions US$)
treasury.worldbank.org 13International Bank for Reconstruction and Development (IBRD)
Operating Income*
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
US
$ m
illi
on
Fiscal Years
* Reported in IBRD’s financial statements as net income before Board of Governors-approved transfers and net unrealized gains (losses) on
nontrading derivatives, loans, and borrowings measured at fair value, per Financial Accounting Standard No. 133 as amended. See annex for
more details.
treasury.worldbank.org 14International Bank for Reconstruction and Development (IBRD)
Strict Statutory Lending Limits and Low Leverage
Maximum “gearing ratio” of 1:1
The World Bank can never lend
more than subscribed capital,
reserves, and surplus
106
218
Fiscal Year 2009 (US$ billion)
(a) Net of accumulated loan loss provisions
48
384244
38
2005 2006 2007 2008 2009
Borrowings(b)
as % of total
subscribed
capital,
reserves, and
surplus
(b) Borrowings net of associated swaps, excluding
accrued interest and issuance costs
(fiscal year 2009: US$105.617 billion)Outstanding
Loans and
Guarantees(a)
Subscribed
Capital,
Reserves,
and
Surplus
49%
Low leverage
Borrowings account for about
48% of total subscribed capital,
reserves, and surplus
100%
treasury.worldbank.org 15International Bank for Reconstruction and Development (IBRD)
Prudent Liquidity Policy
Minimum liquidity target:Highest six months of expected debt service plus one-half of net approved loan disbursements, as projected for the fiscal year
Actual liquidity exceeds minimum target to provide financial flexibility The FY 2010 prudential minimum liquidity level has been set at US$20 billion
18.5 18.0 18.420.1
18.0 18.020.0
18.016.0
19.0
30.0
24.2 24.2 24.926.4
30.9
26.2 25.022.0 22.7
37.8
20.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Minimum Liquidity Target (US$ bn)
Actual Liquid Assets (US$ bn)
treasury.worldbank.org 16International Bank for Reconstruction and Development (IBRD)
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The World Bank’s Development Activities
Financial Position of the World Bank
The World Bank in the Capital Markets
4 Annexes
Outline
treasury.worldbank.org 17International Bank for Reconstruction and Development (IBRD)
Activities in theCapital Markets
US$25-35 billion borrowings per year
Frequent international issuer with over 500 transactions per year
Wide variety of products with different maturities, currencies, and structures
US$70-75 billion funds invested for IBRD and other clients
85% are managed internally 15% are managed externally Full spectrum of assets, from fixed income to
private equity
US$25-35 billion derivative operations per year
Variety of derivative products for risk management
treasury.worldbank.org 18International Bank for Reconstruction and Development (IBRD)
Funding Strategy andObjectives
Meet investors’ needs
Safe investment (AAA/Aaa credit rating) Wide choice of products: benchmark
bonds and customized financing –structured or plain vanilla Sustainable investment opportunity
Ensure high execution standards
Broad sponsorship from underwriters Solid primary placement with a
diversified investor base Spread performance
treasury.worldbank.org 19International Bank for Reconstruction and Development (IBRD)
Annual Funding Volumes(fiscal years 1995-2009, billions US$)
FY 1998 and FY 2009 funding volumes were increased in response to the financial crisis and the resulting increase in lending activity
The funding volume for FY 2010 is expected to be around US$30 billion.
1011
18
28
22
1617
22
19
1213
10 11
19
44
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
treasury.worldbank.org 20International Bank for Reconstruction and Development (IBRD)
IBRD Product and Currency Mix
0%
20%
40%
60%
80%
100%
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Structured Notes
Other Plain Vanilla
Bonds
Benchmark/Global
Bonds
Fiscal Years ending June 30
Structured Notes: Callable and puttable, floating rate with caps, floors or collars, step-up and step-down coupons, and others
Other Plain Vanilla Notes: Uridashi and local / non-core currency (Australian Dollar, Brazilian Reais, Chilean Peso, Colombian Peso, Czech
Koruna, Hong Kong Dollar, Hungarian Forint, Indian Rupee, Malaysian Ringgit, Mexican Peso, New Romanian Leu, New Turkish Lira, New Zealand
Dollar, Philippine Peso, Polish Zloty, Russian Ruble, Singapore Dollar, Slovak Koruna, South African Rand, South Korean Won, Swiss Franc)
Benchmark / Global Bonds: Australian Dollars, Canadian Dollars, Euros, New Zealand Dollars, South African Rand, Turkish Lira, and US Dollars
Currency Distribution FY2009 (YTD)
Total amount: US$44.4 billion
Others
(BRL, CHF, CLP,
COP, INR, JPY,
MXN, RON, RUB,
SEK, SGD, TRY)
3.3%
ZAR
5.4%
USD
75.0%
NZD
1.4%
EUR
9.4%HKD
2.9%
AUD
2.6%
treasury.worldbank.org
World Bank Discount Notes
The World Bank offers flexible and customized short-term debt instruments through its US$ Discount Notes Program
Discount Notes are offered in the United States and Eurodollar markets
Discount Notes characteristics:– maturities from overnight to 360 days – aggregate face amounts of US$ 50,000 and higher per maturity date
Sold through a group of dealers consisting of:– Banc of America Merrill Lynch– Barclays Capital– First Tennessee Financial– Goldman Sachs– HSBC– Jeffries & Co.– UBS
Rates for World Bank Discount Notes are posted on Bloomberg's “ADN” page under the World Bank option (”WBDN”)
Simple documentation governed by a Supplemental Information Statement
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treasury.worldbank.org 22International Bank for Reconstruction and Development (IBRD)
Innovation in theCapital Markets
60 years of innovation in the global capital markets:
First currency swap executed in the international capital markets in 1981
First Global Bond issued in US$ (1989), in Yen and New Zealand Dollars (1992), and in Deutsch Marks (1993)
First fully integrated global electronic bond offering via the internet (2000)
First fully electronic swap auction (2003)
Pioneer in opening and developing new markets and creating structured products
treasury.worldbank.org
Sustainable Investment Focus & Innovation in the Capital Markets
The World Bank partners with banks that offer their clients sustainable investment opportunities and provide regionally-focused investment products that cater to investors interested in the use of their funds and in analyzing investments using also environmental, social and governance criteria to establish the appropriate risk-adjusted return.
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treasury.worldbank.org 24International Bank for Reconstruction and Development (IBRD)
Summary
© Curt Carnemark/ World Bank
The World Bank’s mandate is to promote sustainable
economic growth in its borrowing member countries
with a view to alleviate poverty.
World Bank shareholders benefit from IBRD’s
financial services for a variety of purposes ranging
from health and education systems to environmental
and infrastructural projects. Especially in times of
financial market stress, the members of the World
Bank look to the World Bank for financing solutions.
IBRD’s AAA/Aaa rating ensures safe investment and
is based on:
- solid capital structure and financial performance
- backing from its shareholders
- conservative financial management and policies
To support development projects in client countries,
the World Bank offers investors a broad range of
products in the capital markets:
- benchmark bonds
- tailor-made bonds to suit specific investor needs
- bonds in various currencies and maturities
- sustainable investment opportunities
treasury.worldbank.org 25International Bank for Reconstruction and Development (IBRD)
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The World Bank’s Development Activities
Financial Position of the World Bank
The World Bank in the Capital Markets
4 Annexes
Outline
treasury.worldbank.org 26International Bank for Reconstruction and Development (IBRD)
Annex: The World Bank Group
International Bank for Reconstruction and Development (IBRD), known as “The World Bank” in the capital markets
International Development Association (IDA)
International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
International Centre for the Settlement of Investment Disputes (ICSID)
treasury.worldbank.org 27
Acknowledgements and Disclaimers
All photos, graphics and content © World Bank This presentation has been prepared by the World Bank (International Bank for Reconstruction and Development, IBRD) for informationpurposes only, and the IBRD makes no representation, warranty or assurance of any kind, express or implied, as to the accuracy orcompleteness of any of the information contained herein.
No Offer or Solicitation Regarding Securities. This presentation may include information relating to certain IBRD securities. Any suchinformation is provided only for general informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy anyIBRD securities. All information relating to securities should be read in conjunction with the appropriate prospectus and any applicablesupplement and Final Terms thereto, including the description of the risks with respect to an investment in such securities, which may besubstantial and include the loss of principal. The securities mentioned herein may not be eligible for sale in certain jurisdictions or to certainpersons.
Consult with Advisors. Investors considering purchasing an IBRD security should consult their own financial and legal advisors forinformation about such security, the risks and investment considerations arising from an investment in such security, the appropriate toolsto analyze such investment, and the suitability of such investment to each investor's particular circumstances.
No Guarantee as to Financial Results. IBRD does not warrant, guarantee or make any representation or warranties whatsoever, express orimplied, or assumes any liability to investors regarding the financial results of the IBRD securities described herein.
Each recipient of this presentation is deemed to acknowledge that this presentation is a proprietary document of IBRD and by receipt hereofagrees to treat it as confidential and not disclose it, or permit disclosure of it, to third parties without the prior written consent of the IBRD.All content (including, without limitation, the graphics, icons, and overall appearance of the presentation and its content) are the property ofthe IBRD. The IBRD does not waive any of its proprietary rights therein including, but not limited to, copyrights, trademarks and otherintellectual property rights.