The World Bank over the last month repaid and refinanced 500 billion yen in loans at more favourable interest rates in what was the first step in a plan to refinance its existing debt Eugene Rotberg World Bank vice-president/treasurer said. He tolds in a telephone interview from Washington that the moves are consistent with but not driven by the Banks view that interest rates have essentially bottomed out and will move higher by year-end. Rotberg was responding to a question following news the Bank would exercise its option to prepay early some 196 mln Swiss francs of existing bonds in the Swiss franc market. The bond redemptions are the first in the public market and may be followed by similar moves in other capital markets if the Bank considers the exercise financially beneficial and consistent with its overall funding strategy. Rotberg noted that the World Bank is very liquid right now with some 18 billion dlrs in cash available. The Bank will be looking at various instruments and the levels they are trading at in determining what issues will be repaid he said. However Rotberg said that unlike the yen loans there was no immediate plan to refinance the Swiss franc bonds although the Bank could possibly issue new debt in that market over the next few months. He said that the yen loans which were the equivalent of some three billion dlrs principal amount had been from the Japanese long-term credit banks trust banks and insurance companies and had interest rates of between seven and nine pct. All the borrowings were refinanced as traditional syndicated loans with the same parities at the Japanese long-term prime rate currently 5.8 pct. The World Bank borrows in excess of 10 billion dlrs a year with almost all its borrowings in medium and long-term fixed rate markets. Rotberg declined to say whether the 1/4 point rise in U.S. Prime rates yesterday to 7-3/4 pct signalled a reversal in the trend in interest rates. Over the short term rates could go up or they could go down he said adding that the bank takes a longer view on interest rates when deciding its financing strategy. However given the current level of interest rates it would not be wise to take short-term money on to the liability side of the Banks balance sheet he said.
WORLD BANK REFINANCED 500 BILLION YEN OF LOANS