Bonds for Sustainable Development INVESTOR NEWSLETTER • APRIL 2015 Sustainable Development recognizes that growth must be both inclusive and environmentally sound to reduce poverty and build shared prosperity for today’s population and to continue to meet the needs of future generations. It is efficient with resources and carefully planned to deliver both immediate and long-term benefits. The three pillars of sustainable development – economic growth, environmental stewardship, and social inclusion – carry across all sectors of development, from cities facing rapid urbanization to agriculture, infrastructure, energy development and use, water availability, and transportation. Photo: © Allison Kwesell / The World Bank 1 WORLD BANK BONDS FOR SUSTAINABLE DEVELOPMENT | INVESTOR NEWSLETTER • APRIL 2015 WHO WE ARE World Bank Bonds Support World Bank Commitments* Sustainable Development *FY14 Commitments, totaling US$18.6 billion The International Bank for Reconstruction and Development (IBRD), BY SECTOR commonly known as ‘the World Bank’, was founded in 1944 with the Governance purpose of financing the reconstruction of Europe after World War II. (Public Finance, Nowadays, the purpose of the World Bank is to provide financing and Administration Industry & Trade knowledge services to the governments of middle income countries and Law) 13% to reduce poverty and promote shared prosperity all while ensuring 26% social, environmental, and governance (ESG) aspects are covered. The World Bank supports sustainable development, focusing on Education poverty reduction and inclusive growth across a range of sectors 6% including among others: agriculture and food security; education; energy; finance, trade and industry; law and governance; healthcare Transportation & and social services; transport; and water and sanitation (see page 3 for Information and Health & Social more on the sectors). World Bank projects undergo a rigorous review Communications Services and approval process including early screening to identify environmental Technology 8% 23% and social impacts and designing concrete mitigation actions. Water & The World Bank integrates five cross cutting themes into its activities Sanitation 7% helping its clients develop solutions: climate change; gender; jobs; Agriculture & public-private partnerships; and fragility, conflict and violence (see page Food Security Energy 4% 13% 3 for more). The World Bank funds its activities by issuing bonds for sustainable BY REGION development in the international capital markets to support projects that achieve positive social, environmental and development impacts. Information on bonds for investors is available on the World Bank Treasury website: www.worldbank.org/debtsecurities. ECA The World Bank has been issuing debt since 1947 and has been 25% rated triple-A for over 50 years. Its financial strength is based EAP 23% on a solid financial structure, conservative financial policies and consistent performance, as well as support and capital backing from MNA 14% its shareholders. For more on the World Bank's financial strength, see SAR below. 11% LAC AFR 2% Recent World Bank Bond Issues 25% AUD 550 million 2.5% 5-year global bond due 03/2020 CAD 1.2 billion 1.125% 5-year global bonds due 03/2020 USD 4 billion 1.625% 7-year global bonds due 02/2022 Africa (AFR) US$0.4 billion; East Asia & Pacific (EAP) US$4.2 billion; Europe & Central Asia (ECA) EUR 600 million 0.5% 15-year global bond due 04/2030 US$4.7 billion; Latin America & Caribbean (LAC) US$4.6 billion; Middle East & North Africa (MNA) US$2.5 billion; and South Asia (SAR) US$2.1 billion Four Pillars of the World Bank’s Triple-A Credit Rating • Global diversification • Statutory lending limit: • Prudential minimum • 188 sovereign members/ • Lending only to sovereign outstanding loans must liquidity is equal to shareholders and sovereign guaranteed be less than paid-in highest six months of • In addition to paid-in Prudent Risk Management Substantial Liquidity Strong Capital Base Quality Loan Portfolio projects and callable capital plus projected debt service capital, shareholders reserves over next 18 months plus have committed additional • Borrowing clients are also • Equity-to-loans ratio half of net approved loan callable capital to satisfy shareholders; increased remains above the disbursements debt holder claims incentive to repay minimum of 20% set • Actual liquidity exceeds • Shareholders responsible • Preferred creditor status by the Board excluding minimum to increase for the full amount of their recognized by rating callable capital financial flexibility callable capital regardless agencies and financial market participants • Policies are designed to • Liquid assets of others' ability to fulfil minimize the need for a conservatively managed their obligations • Concentration limits for call on capital against strict guidelines: • Largest shareholders: individual borrowing • Foreign currency and highly rated (AA- or USA (15.9%); Japan countries interest rate risks better) fixed income (8.6%); China (5.5%); • Policy of freezing government and agencies managed carefully to Germany (4.8%); France additional lending if securities and AAA minimize risks (4.3%); and UK (4.3%) repayments not on time corporate bonds and ABS 2 WORLD BANK BONDS FOR SUSTAINABLE DEVELOPMENT | INVESTOR NEWSLETTER • APRIL 2015 WHAT WE DO SECTORS: Bringing global experience and knowledge to our clients across the sustainable development spectrum Agriculture and Food Security: Governance (Public Administration and Law): The largest provider of development finance for Develop innovative, integrated solutions to institutional agriculture globally supporting projects that end poverty problems with procurement, financial management, and feed growing populations. Three of every four people taxation, public management, regulatory policy, in developing countries live in rural areas and most transparency, digital governance, law and development, depend on agriculture for their livelihood. anticorruption, and social accountability. Education: Health and Social Services: A global leader in education, especially in building Invest to support healthy societies by improving access to evidence for a systems approach to education reforms quality, affordable health services, medicines and related and investments. Education is a powerful driver for products. We also support a combination of public and development and reducing poverty and is central to the private sector solutions that can scale up and strengthen development strategies of all our clients. front-line and facility-based health services. Energy: Transportation, Information Help clients secure affordable, reliable and sustainable and Communication: energy balancing externalities by applying strict due Provide clients with physical and virtual infrastructure diligence and analyses of alternatives. This includes financing and policy advice to improve connectivity accelerating energy efficiency gains, moderating demand and competitiveness, link people to markets and social for energy, and expanding renewable energy. services to stimulate economic growth, increase climate Photos: © World Bank (Masaru Goto; Gennadiy Ratushenko; Charlotte Kesl; Maria Fleischmann; Curt Carnemark; Arne Hoel; John Hogg; Imal Hashemi) resilience and reduce carbon footprint. Finance, Industry, and Trade: Water and Sanitation: Support client efforts to develop their financial market Help clients provide households and businesses with infrastructure, boost trade and investment, improve potable water and proper sanitation services, while productivity and competitiveness at the national and allocating and managing water sustainability including industry levels, and create a better environment in general through: irrigation for agriculture; drought resilience and for business operations. flood management; and conservation of quality freshwater resources and ecosystems. CROSS CUTTING THEMES: Helping our clients integrate solutions for key sustainable development challenges into their strategic planning and projects CLIMATE CHANGE Help our clients adapt to or mitigate the effects of climate change, such as planning and financing low-carbon cities, developing low-carbon transportation, and investing in renewable energy. GENDER Work with partners and clients to advance gender equality globally, highlighting inequality and discrimination when found and leveraging our lending, expertise, and convening power to support equality. JOBS Play an important role tackling the dual challenges of creating millions of new jobs and increasing productivity of the informal sector workforce by providing clients with policy advice, education, and investments in projects that create jobs. PUBLIC-PRIVATE PARTNERSHIPS (PPPs) Support PPPs that can bring efficiency and sustainability to public services with upstream policy advice for regulatory and institutional reforms to downstream transaction support. FRAGILITY, CONFLICT, AND VIOLENCE Work to understand the drivers of conflict, helping to shape our response across core sectors to the unique needs of countries emerging from conflict but vulnerable to reversals. 3 WORLD BANK BONDS FOR SUSTAINABLE DEVELOPMENT | INVESTOR NEWSLETTER • APRIL 2015 WHY IT MATTERS World Bank Projects Delivering Results A cross section of World Bank projects from around the world. For information on more projects and sectors, please see http://www.worldbank.org/en/results KAZAKHSTAN Strengthening institutional capacity of agencies for effective implementation of selected laws to improve the efficiency, transparency, and access to services in the justice sector (P143274) Expected impact: BRAZIL • Strengthen institutional capacity in targeted LEBANON Promoting efficient and sustainable use of water by government agencies. Improving regional education departments and enhancing soil management practices and • Improve efficiency and transparency in certain schools (P118187) improving water quality (P112074) public services in the justice sector. Expected impact: Expected impact: IBRD Financing: US$36 million • 10% increase in preschool enrollment. • 5,600 ton reduction in wastewater pollution. • 100% of teachers enrolled in professional • 235,465 ha state environment development to improve teaching quality. conservation areas managed. • Build government capacity to effectively • 20% improvement in irrigation manage the education system and water efficiency. to make evidence-based policy • 2 million people benefit. decisions. IBRD Financing: IBRD Financing: US$70 million US$40 million Photos: © World Bank (Almas Dissyukov; Allison Kwesell; John Hogg; Maria Fleischmann; Dominic Chavez; Arne Hoel) BOTSWANA INDONESIA Increasing the coverage, Meeting growing efficiency and sustainability electricity demand and of targeted and evidence-based increasing access to electricity HIV/AIDS interventions (P102299) with expanded power Expected impact: transmission networks (P123994) • Increase efficiency in HIV/AIDS Expected impact: program through an increased focus on • Improved quality and adequacy of power prevention activities. supply. • Improve national coordination of prevention • 35-45% increase in electricity sales. activities, including strengthened accountability PARAGUAY • 6.1 million KVA increase in transformer Improving the socio-economic condition of and financial management. capacity in substations small-scale farmers and indigenous communities IBRD Financing: US$50 million IBRD Financing: US$325 million in a sustainable way (P148504) Expected impact: • Strengthen access to markets and value chains • Enhance community organization and self-governance • 200,000 beneficiaries IBRD Financing: US$100 million About the World Bank: The World Bank (International Bank for Reconstruction and Development, About the World Bank Group: The World Bank Group consists of five separate legal organizations IBRD), rated Aaa/AAA (Moody’s/S&P) operates as a global development cooperative owned by 188 member working towards a common mission to eradicate extreme poverty and promote shared prosperity. countries. The World Bank has two main goals: to end extreme poverty and promote shared prosperity. It It includes International Bank for Reconstruction and Development (IBRD), the International Development provides its members with financing, expertise and coordination services so they can achieve equitable and Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency sustainable economic growth in their national economies and find effective solutions to pressing regional and (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). Both IBRD and IFC are global economic and environmental problems. issuers of bonds. DISCLAIMER: This investor update has been prepared by the World Bank (International Bank for Reconstruction and Development, IBRD) for information purposes only, and the IBRD makes no representation, warranty, or assurance of any kind, express or implied, as to the accuracy or completeness of any of the information contained herein. This newsletter may include information relating to certain IBRD securities. Any such information is provided only for general informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy any IBRD securities. The securities mentioned herein may not be eligible for sale in certain jurisdictions or to certain persons. Email: debtsecurities@worldbank.org Tel: +1 (202) 477 2880 Web: http://treasury.worldbank.org/capitalmarkets/ Address: Investor Relations, Capital Markets Department 1818 H Street NW, Washington, DC 20433, USA Published in April 2015 4 WORLD BANK BONDS FOR SUSTAINABLE DEVELOPMENT | INVESTOR NEWSLETTER • APRIL 2015