1. Investing in Supranationals
THE WORLD BANK
Investing in Supranationals
George Richardson
Head of Capital Markets
1225 Connecticut Ave NW Washington, DC USA

2. Road Map for Today’s Presentation
Why care about Supranational issuance?
What / Who are “supranationals”?
How do they compare to GSE’s
What are their characteristics
Issuance profiles
Challenges to buying Supranational bond issues
Example: The World Bank

3. Why care about Supranationals?
Diversification of AAA portfolios
Investment of safe haven assets
Replacement for shrinking supply by GSEs
Earn “social” returns in addition to financial returns

4. What are Supranationals?
A supranational are international institutions that provide development financing, advisory services and/or other financial services to their member countries to achieve overall goal of improving living standards through sustainable economic growth.
Key features
Triple-A rated (with only two exceptions in the past)
0% risk weighting with Basle II and III
Financial strength based on
diversified, sovereign shareholders
conservative risk management
quality loan portfolio (preferred creditor status)
substantial liquidity and consistent profitability
strong capitalization
Issuers of US$ global benchmarks
Issuers of only senior, unsecured debt (with only three, known exceptions)
Some issue other instruments of possible interest to US government and official sector investors
Benchmark bonds included in major USD and global indices

5. Who are the AAA Supranationals?

6. The Sov/Supra/Agency (SSA) sector
The different categories of issuers
AAA Supranationals
AfDB
AsDB
CoEDB
EBRD
EIB
IADB
IFC
IBRD (World Bank)
NIB
Full Government Guarantee
KfW (Germany)
OKB (Austria)
ICO (Spain)
EDC (Canada)
EFSF (some European sovereigns)
Implied Guarantee or Government Ownership
BNG
CADES
Eksportfinans
Eurofima
SEK

7. GSE’s – Supra’s: Some basic differences
US GSE
Supranational
Mission
US Residential Property
International, multi-sectoral economic development and poverty reduction
Leverage
N/A – Negative equity gap is bridged each quarter (when applicable) with investment from Treasury under the preferred stock purchase program
Capped by capital (in most cases to 1x leverage or less)
Sponsorship
US Government
Multi-government
Call on Capital
US Treasury
Member nations
Oversight
Federal Housing Finance Agency – regulator (and conservator)
Resident board with representatives from all members who approve all loans and control other activities

8. US$ Issuance Volumes

9. Myths about Supranationals
The Myths
Myths Debunked
The World Bank is a corporate issuer
World Bank (IBRD) is a supranational but supranationals can be found in both corporate/aggregate and government-related indices
KfW is the same type of MDB with the same development mandate as World Bank or other supranational
KfW is the German government guaranteed agency responsible for promoting German business interest domestically and around the world. Their credit depends on the guarantee from the Federal Republic of Germany.
If member countries do not repay their loans, investors in supranationals do not get their money back.
Investors in supranational bonds are not exposed to project / lending risk. Supranationals maintain conservative reserves and have subscribed capital from their member countries to always ensure the ability to pay its bond investors.

10. Challenges to investing in supras
State or local laws governing eligibility for investments
Finding bonds in secondary market
Connecting syndicate desks at banks with sales forces that cover the US official sector investor base
Are we issuers of products you want to buy?
Types of projects being financed include environment and climate change, health and education, social protection, and business development within a targeted region.

11. World Bank Overview
International organization owned by 187 member countries
A global development cooperative – its owners are its clients
The world’s largest source of development finance and expertise
60 years of financing development projects:
US$500 billion in financing
Approximately 130 countries
5,000+ projects
10,000 staff from 160 countries in 130 countries
The World Bank (International Bank for Reconstruction and Development, IBRD) is the largest part of the World Bank Group
Finances activities by issuing bonds in the capital markets

12. The World Bank Group
International Bank for Reconstruction and Development (IBRD) Issuer of “World Bank” Bonds
International Development Association (IDA)
International Finance Corporation (IFC)
Multilaterial Investment Guarantee Agency (MIGA)
International Centre for the Settlement of Investment Disputes (ICSID)

13. United States and World Bank
The World Bank was originally set up to help countries rebuild after World War II
The U.S. was a leading force in its establishment and is the largest shareholder (16.8%)
The current president of the World Bank, Robert Zoellick, was previously a U.S. Deputy Secretary of State and U.S. Trade Representative
The Mount Washington Hotel in Bretton Woods, New Hampshire hosted representatives from 44 nations for the UN Monetary and Financial Conference from July 1-22, 1944.
John Maynard Keynes chairing the conference in July 1944.

14. Millennium Development Goals
The World Bank and its member countries are working towards these 8 specific, measurable targets, which aim to reduce poverty by half by 2015 1 2 3 4 5 6 7 8
Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and empower women
Reduce child mortality
Improve maternal health
Combat HIV/AIDS, malaria, and other diseases
Ensure environmental sustainability
Develop global partnerships

15. The World Bank Increases Funding When & Where it is Needed
Funding volume grows in response to global financial crises and the resulting increase in lending activity, and/or refinancing
Annual Funding Volumes (fiscal years billions US$)

16. How to find World Bank Bonds on Bloomberg
Pricing Sources: Bloomberg: IBRD <Govt> <Go>

17. How to find World Bank Bonds on Bloomberg
Pricing Sources: Bloomberg: Discount Notes: WBDN <Go>

18. World Bank Green Bonds
World Bank Green Bonds support mitigation and adaptation projects selected by World Bank climate change and sector specialists
Investment product developed for investors concerned about the impacts of climate change
Investors benefit from Aaa/AAA rating of the World Bank (IBRD), World Bank’s “due diligence” for projects and are provided annual reporting through newsletter
Green Bonds have “demonstration benefits” for other issuers
Next bond that came out was the Green bond.
This is a little different from the Eco bond and the Cool bond. In this case the bond’s proceeds, meaning the money we get from the investors, is not going to the general pool, but rather is earmarked specifically for environmental projects.
How does the World Bank GREEN BOND work?
Funds from the Green Bond will support climate change projects that are selected by World Bank environmental and climate change specialists.
Overview of the Green Bond process:
Investors buy World Bank Green Bonds
Funds are assigned to a special “green” account to support climate change projects
Environmental and climate change specialists select, review, and approve green project portfolio (this is based on an agreed list of mitigation and adaptation criteria – see appendix) 18

19. World Bank Green Bonds and Funds
Since the inaugural issue in 2008, approximately USD 2.2 billion has been raised with 35 World Bank green bonds issued in 15 different currencies. Nikko Asset Management set up diversified currency World Bank Green Bond funds that won an ESG (“Environment, Social, Governance”) award in Europe. A US fund manager is now currently working on creating its own green fund along with an index.
List of Investors
USD
California State Treasurer’s Office
CalSTRS
MMA Praxis Mutual Funds
New York Common Retirement Fund
Sarasin
SEB Ethos rantefund
SEB Trygg Liv
Second Swedish National Pension Fund (AP2)
Third Swedish National Pension Fund (AP3)
Trillium Asset Management
UN Joint Staff Pension Fund
Other currencies
Adlerbert Research Foundation
AP2 – Second Swedish National Pension Fund
AP3 – Third Swedish National Pension Fund
LF Liv
MISTRA
Nikko Asset Management
Skandia Liv
How does the World Bank GREEN BOND work?
Funds from the Green Bond will support climate change projects that are selected by World Bank environmental and climate change specialists.
Overview of the Green Bond process:
Investors buy World Bank Green Bonds
Funds are assigned to a special “green” account to support climate change projects
Environmental and climate change specialists select, review, and approve green project portfolio (this is based on an agreed list of mitigation and adaptation criteria – see appendix)

20. More Information… Internet: treasury.worldbank.org
Phone:
Fax:
George Richardson
Urvi Mehta
Address: H Street, Washington, DC 20433, U.S.A.
Pricing Sources:
Bloomberg:
IBRD <Govt> <Go> or IBRD <Go>; for Discount Notes: WBDN <Go>

22. 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 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.
No Offer or Solicitation Regarding Securities. This presentation 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. All information relating to securities should be read in conjunction with the appropriate prospectus and any applicable supplement and Final Terms thereto, including the description of the risks with respect to an investment in such securities, which may be substantial and include the loss of principal. The securities mentioned herein may not be eligible for sale in certain jurisdictions or to certain persons.
Consult with Advisors. Investors considering purchasing an IBRD security should consult their own financial and legal advisors for information about such security, the risks and investment considerations arising from an investment in such security, the appropriate tools to 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 or implied, 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 hereof agrees 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 of the IBRD. The IBRD does not waive any of its proprietary rights therein including, but not limited to, copyrights, trademarks and other intellectual property rights.

23. Investing in Supranationals
THE WORLD BANK
Investing in Supranationals
George Richardson
Head of Capital Markets
1225 Connecticut Ave NW Washington, DC USA