The World Bank (International Bank for Reconstruction and Development, rated Aaa/AAA) increased its Kangaroo bond due February 2024 to a total amount of AUD 2.1 billion, with an AUD 800 million tap. This is the largest Australian dollar SSA (Supranationals, Sovereigns and Agencies) Kangaroo tap since 2016.
The first tranche of the bond was issued in February this year when it was heralded as the largest in nearly a decade. Responding to strong investor demand for safe-haven assets, the World Bank announced the deal yesterday and quickly garnered diverse investor participation, both domestic and global.
The joint lead managers for the transaction are Deutsche Bank, Nomura and TD Securities.
The tap was upsized from an initial target of AUD 300 million to AUD 800 million on the back of a strong order book totalling AUD 1.05 billion. The AUD 800 million tap offers a coupon of 2.20% per annum with a February 27, 2024 maturity and has an issue price of 101.921% to yield 1.7775% per annum. This equates to a spread of 46.85 basis points over the 2.75% Australian Commonwealth Government Benchmark (ACGB) due April 2024.
"The amazing reception we received from a large breadth of investors domestically and globally, even during the time of significant market volatility, is a testament to the value investors place on the safety and liquidity of World Bank bonds," said Andrea Dore, Head of Capital Markets, World Bank. "We appreciate the hard work our bank partners put into this transaction and are grateful for the continued support from investors from the Australian market as well as from around the world."
Craig Johnston, Director AUD & NZD Syndicate Deutsche Bank said, "The World Bank's return to the AUD market with the AUD 800 million taps of the Feb 2024 line further highlights the strong market access that World Bank enjoys. The transaction launched during a 'risk-off' session in the Asian day and whilst investors were cautious during this period, the robust orderbook is a perfect reflection of how positively investors view the World Bank name especially in times of volatility. The World Bank has built up a fantastic following in Australian dollars and this transaction further emphasises the unparalleled support that World Bank has both from domestic and international investors. Deutsche Bank is very honoured to be able to work on such a high-profile transaction for the World Bank and is grateful to be trusted to execute this transaction during a challenging market backdrop."
Oliver Holt, Head of AUD Syndicate, Nomura said, "Another testament to the World Bank's special place in the Australian dollar bond market. Despite challenging global risk markets and a busy primary market pipeline the World Bank successfully increased the largest Kangaroo transaction in a decade by an additional AUD 800 million. The Kangaroo market continues to prove to be a top pick for a broad array of investors in all market conditions. Nomura was honoured to oversee an increase of this line once again."
Yuriy Popovych, Director, Asia Syndicate at TD Securities said, "An outstanding result by the World Bank team, coming to the market once again with a stellar trade and execution. The deal was perfectly timed and a large liquid line from an extremely high-quality name was exactly what
investors were looking for in an environment of heightened market volatility. World Bank's continued investor work in Australia and Asia was rewarded with a very high-quality order book and over AUD 1 billion of demand. At AUD 2.1 billion outstanding, this line is now World Bank's second largest AUD- denominated bond, an impressive feat that the issuer achieved via only two market outings."
The notes are issued under the laws of New South Wales and documented under the World Bank's Global Debt Issuance Facility. The notes will be listed on the Luxembourg Stock Exchange, will settle through Austraclear, Euroclear and Clearstream, and are intended to qualify as eligible collateral for repurchase agreements for the Reserve Bank of Australia's open market operations.