PRODUCT NOTE

IBRDPricingBasics
Highlights

Thelendingrateiscomprisedofavariable
referencerateplusaspread.

PricingStructure

Theapplicablespreadistheoneprevailingatloan
signingandmaybedifferentfromthespread
prevailingatnegotiations.

IBRDpricingisbasedonafloatingreferencerate,usuallysix
monthLIBOR1,plusaspreadthatiseitherfixedoverthelife
oftheloanorvariablefromonesemestertoanother.The
applicablespreadwillvaryaccordingtoaveragerepayment
maturity.InadditiontothespreadoverLIBOR,theBank
chargesafrontendfee.Seeoverleafforsamplepricing.

Theapplicablespreadfordisbursementsofloans
withaDeferredDrawdownOption(DDO)isthe
spreadprevailingonthewithdrawaldate.

FixedSpread

IBRDloanpricingissubjecttoannualandperiodic
reviews.

ThefixedspreadoverLIBORincludesacontractualspread,a
maturitypremium(whereapplicable),achargetocoverthe
BanksprojectedfundingcostrelativetoLIBOR,amarketrisk
premium,andabasisswapadjustmentforsomecurrencies
otherthanUSdollars.
Becausethefixedspreaddoesnotvaryoncetheloan
agreementissigned,theBankmustprojectitsfundingcost
overthelifeoftheloan,thusabsorbingthefullriskoffuture
financingcosts.Theriskpremiumcoversforthepossibilityof
higherrefinancingcostsinthefuture.Thematuritypremium
accountsforthebankscostoftheincrementalcapital
neededtofundlongermaturities.Longermaturitiesmay
carryhigherprojectedfundingcosts,marketriskandmaturity
premia.Theapplicablefixedspreadistheoneprevailingat
thetimethattheloanissignedandmaybedifferentfromthe
fixedspreadprevailingatthetimeofnegotiations.

VariableSpread
Thevariablespreadincludesacontractualspread,amaturity
premium(whereapplicable),andachargetocoverthe
BanksaveragefundingcostrelativetoLIBOR,whereinthe
benefitsandrisksofchangesinIBRD'scostofborrowingare
bornebytheborrower.Thevariablespreadisrecalculated
everyJanuary1andJuly1basedonthecostoftheunderlying
fundingfortheseloans.

IFLswithaDeferredDrawdownOption
DevelopmentPolicyLoans(DPLs)withaDeferredDrawdown
Option(DPLDDOs)andDPLswithCatastropheDeferred
DrawdownOptions(CatDDO)areloansthatallowthe
borrowertodeferthedisbursementoffundsuntilthe
financingisneeded.Theseloanscarrythesamelendingrates
asregularIBRDloans.Loanchargesvaryaccordingtothetype
ofDDO.Seeoverleafforfees.
DDOdisbursementsarepricedattheprevailingspreadover
LIBORforIBRDloansatthetimeofwithdrawalbasedon
applicableaveragerepaymentmaturity(ARM).The
calculationofARMbeginsatloaneffectivenessforthe
determinationofthematuritypremium(ifapplicable),butat
withdrawalfortheremainingcomponentsofthespread.

PricingReviewProcess
TheWorldBankconductsanannualreviewofloancharges
thecontractuallendingspread,thematuritypremiumand
thefrontendfeetoensurethatpricingisregularlyupdated
andalignedwiththeprevailingneedsoftheinstitutionandits
shareholdersasawhole.TheBankalsoregularlyreviewsthe
technicalcomponentsofthefixedspreadtheprojected
fundingcostandtheriskpremiumtoensurethatthey
reflectunderlyingmarketconditions.

LondonInterbankOfferedRate(LIBOR)isafloatinginterestrate.Itisthe
rateatwhichbankscanborrowunsecuredfundsfromotherbanksinthe
Londonwholesalemoneymarket.IBRDloansdenominatedinEuroswillhave
theEuroInterbankOfferedRate,Euribor,asthebaselendingrate.

USDLendingRates&LoanChargesfortheIBRDFlexibleLoan1
FixedSpread3
Forloanssignedon/afterApril6,2012

VariableSpread2
January1June30,2012

AverageRepayment
Maturity(4)

Upto12Years

ReferenceRate
ContractualSpread

Greaterthan12
to15Years

Greaterthan15
to18Years

Upto12Years

Greaterthan12
to15Years

6MonthLIBOR

6MonthLIBOR

0.50%

0.50%

Greaterthan15
to18Years

AnnualMaturity
Premium

N/A

0.10%

0.20%

N/A

0.10%

0.20%

MarketRiskPremium

N/A

N/A

N/A

0.10%

0.10%

0.15%

FundingCost

0.22%

0.22%

0.22%

0.10%

0.00%

0.15%

LendingRate

LIBOR+0.28%

LIBOR+0.38%

LIBOR+0.48%

LIBOR+0.50%

LIBOR+0.70%

LIBOR+1.00%

FrontEndFee(5)

0.25%

DPLDDOFees

0.25%FrontEndFee;0.50%StandbyFee

CatDDOFees

0.50%FrontEndFee;0.25%RenewalFee

1.
2.
3.

4.

LoansapprovedbeforeJuly1,2010willnotbesubjecttotheannualmaturitypremiumof0.10%foraveragematuritiesofgreaterthan12to15years,and
0.20%foraveragematuritiesgreaterthan15to18years.PricingforDDOsisthatwhichisineffectonthedateofdisbursement.
ThevariablespreadisrecalculatedeveryJanuary1andJuly1.
Thefixedspreadisdeterminedatloansigningandremainsconstantoverthelifeoftheloan.Fixedspreadsare0.05%(5basispoints)lowerforeuro
denominatedloansand0.15%(15basispoints)lowerforyendenominatedloanscomparedtothecorrespondingUSdollarfixedspreads,regardlessofaverage
repaymentmaturity.
ForDDOs,theaveragerepaymentmaturityiscountedfromthedateofloaneffectivenessforthepurposesofdeterminingtheapplicablematuritypremium.A
loanbecomeseffectiveonthedateonwhichIBRDissuesadeclarationofeffectivenessasprovidedintheloanagreement.
Whenannualized,thefrontendfeeaddsapproximately0.03%perannumassuminganaveragerepaymentmaturityof18years.

5.

PricingmaybedifferentdependingonthedateofinvitationtonegotiateandthedateofBoardapprovaloftheloan.ForthelatestIBRDlendingrates,loancharges,
andpricinginothercurrencies,pleasevisittheTreasurywebsiteathttp://treasury.worldbank.org/bdm/htm/ibrd.html.

Contact:
IssamAbousleiman,HeadofBankingProducts,iabousleiman@worldbank.org,+1(202)4580865

UpdatedApril4,2012