WORLD BANK REFINANCED 500 BILLION YEN OF LOANS
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 told Reuters in a telephone interview from Washington
that the moves are consistent with, but not driven by, the
Bank's 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 Bank's balance sheet, he said.
 REUTER
