Sustainable Investment Opportunities - World...

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WORLD BANK

Sustainable Investment Opportunities

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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


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


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


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


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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http://www.flickr.com/photos/arvidbr/516535271/


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%


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


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4 Annexes

Outline


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

http://treasury.worldbank.org/Services/Capital+Markets/Financial+Strength/Capital+Structure+of+IBRD.html

http://treasury.worldbank.org/Services/Capital+Markets/Financial+Strength/Statutory+Lending+Limit+of+IBRD.html

http://treasury.worldbank.org/Services/Capital+Markets/Financial+Strength/Net+Income+of+IBRD.html

http://treasury.worldbank.org/Services/Capital+Markets/Financial+Strength/Loan+Portfolio+and+Lending+Policies.html

http://treasury.worldbank.org/Services/Capital+Markets/Financial+Strength/Liquid+Assets+and+Policies+of+IBRD.html


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


(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$)


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.


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%


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)


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4 Annexes

Outline


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


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


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


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%


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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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


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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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


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4 Annexes

Outline


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.


WORLD BANK

Sustainable Investment Opportunities

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