World Bank’s IBRD Unit Is Seeking to Sell Its First Kangaroo Bonds in Year

The World Bank’s International Bank for Reconstruction and Development is seeking to sell kangaroo bonds for the first time since January 2011.

The IBRD is planning to sell debt due in 2017 and 2022, in an offering managed by Westpac Banking Corp., Australia & New Zealand Banking Group Ltd. and TD Securities Inc., according to an e-mailed statement from Westpac today. The Washington-based borrower’s last offering was in January last year, when it priced A$1 billion ($1.1 billion) of 2014 and 2020 notes, Bloomberg data show.

Sales of kangaroo bonds, or Australian-dollar notes sold by foreign entities in Australia, are set for the biggest monthly total since July as IBRD and European Investment Bank return to the market, according to data compiled by Bloomberg. The extra yield investors demand to hold Australian-dollar quasi- government debt instead of federal securities dropped 32 basis points since Jan. 31 to 98 last week, the lowest since November, Bank of America Merrill Lynch index data show.

The IBRD is marketing five-year kangaroo bonds to yield about 22 basis points, or 0.22 percentage point, more than the asset swap rate, according to a person familiar with the matter. The borrower is also seeking to price 10-year notes at a spread of about 33 basis points, the person said today, asking not to be named as the details are private.

The EIB, based in Luxembourg, added A$600 million to an existing line of kangaroo bonds due in June 2021 on Feb. 23, pricing the 6.25 percent notes to yield 188.75 basis points more than similar-maturity government debt, according to a statement at the time.

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net.

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net.