IBRD Lending Rates and Spreads Applicable on or after April 1, 2023 - Rate Update Summary

Jul 19, 2026

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Quarterly memorandum updating IBRD lending rates and spreads in line with the Bank Policy and Directive on Financial Terms and Conditions of Bank Financing. Covers the determination of average funding spreads for the IBRD Flexible Loan effective April 1, 2023 through June 30, 2023, including currency-specific spread levels. Explains the LIBOR transition framework, the shift to alternative reference rates for new and existing IFL and related loan types, and defines the transition period and its implications for USD debt pools.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages10

Reading Time25 min

Rate Update Summary

Background and LIBOR Transition

IBRD Flexible Loan Rates and Spreads

Maturity Premium and Pricing Groups

Single Borrower Limit

Public Disclosure Authorized Public Disclosure Authorized From: The President April 25, 2023 Memorandum Subject: IBRD Lending Rates and Spreads Applicable on or after April 1, 2023 Rate Update Summary This memorandum provides the quarterly update of IBRD’s lending rates and spreads pursuant to the standard loan pricing as defined in the Bank Policy and Directive “Financial Terms and Conditions of Bank Financing”. 1 The Average Funding Spreads applicable to the IBRD Flexible Loan (IFL) effective between April 1, 2023 and June 30, 2023 have been determined based on the new applicable alternative reference rates at the following levels2 : • EUR denominated loans: negative 6 bps; • loans denominated in USD and other currencies: positive 14 bps. I. Background IBRD promotes poverty reduction and supports sustainable economic and institutional development of member countries by providing financing and related operational assistance through its three main financing instruments – Investment Project Financing (IPF), Development Policy Financing (DPF), and Program-forResults (PfR) . IBRD offers financing of these instruments through one loan product, the IFL, to eligible members.3,4 As part of phase-out of LIBOR beginning January 1, 2022, the Bank has implemented several measures in its lending policies. First, the offering of the IFL Fixed Spread and related spread-fixing conversion features was suspended effective from April 1, 2021, so IFL is currently only available in the form of the IFL Variable Spread, featuring variable spreads over the Reference Rate.5 Further, in accordance with the decision of the Executive Directors on modifications to IBRD and IDA new loan offerings and on the timeline for the existing loans switch-over to new Reference Rates6, 7, 8, effective from January 1, 2022, IBRD has switched the Reference Rates for new IFL approvals from the 6-month LIBOR to the following alternative reference rates: 1 Policy “Financial Terms and Conditions of Bank Financing,” Catalogue No. OPS5 .09-POL. 175, July 1, 2022, and Directive “Financial Terms and Conditions of Bank Financing,” Catalogue No. OPS5.09-DIR.137, July 1, 2022. 2 Please see Table 1 for detailed information. 3 Aside from IFLs, there are a few historic currency pool-based products, which have been discontinued but require rate resetting in IBRD’s portfolio. The only outstanding currency pool loans (CPL) with variable rate terms are the loans to Zimbabwe, which are currently in non-accrual status. There are also IFL and CPL loans whose rates are fixed for the life of the loan through conversion and hedging. 4 In addition, IBRD offers other financial products, including conversions and risk management/hedging products, guarantees, and disaster risk financing. 5 “Proposal to Suspend the Offering of Fixed Spread Loans and Spread-Fixing Conversions in the Context of LIBOR Transition”, R2020-0243/2, December 21, 2020. 6 “Proposed Modifications to IBRD and IDA New Loan Offers and Proposed Timeline for the Existing Loans Switchover to New Market Reference Rates in the Context of LIBOR Transition,” R2021-0129, June 23, 2021. 7 “Proposed Modifications to the IBRD and IDA General Conditions to add flexibility in reference rate replacement provisions,” R2018-0235, October 18, 2018. 8 “Proposal to Manage IBOR Transition Risks in IBRD Loan and IDA Non-concessional Financing Agreements Governed by General Conditions Prior to December 2018,” R2020-0029/1, March 3, 2020. • USD: Secured Overnight Financing Rate (SOFR); • GBP: Sterling Overnight Index Average (SONIA); • JPY: Tokyo Overnight Average Rate (TONA); • EUR: Euro Interbank Offered Rate (EURIBOR) . For the existing Variable Spread Loans (VSL), replacement of LIBOR rates commenced on January 1, 2022 and the replacement was applied for each loan on the first loan rate reset date falling on or after January 1, 2022. Similarly, for the existing Fixed Spread Loans (FSL) denominated in

FAQs

What update does this memorandum provide?

It provides a quarterly update of IBRD lending rates and spreads applicable on or after April 1, 2023, consistent with standard loan pricing terms.

Which average funding spreads apply for IBRD Flexible Loans from April 1, 2023 to June 30, 2023?

EUR-denominated loans have an average funding spread of negative 6 bps, while USD and other-currency loans have a positive 14 bps.

How did IBRD handle the transition away from LIBOR?

IBRD suspended offering fixed-spread features for the IFL from April 1, 2021 and switched reference rates for new approvals from 6-month LIBOR to alternative reference rates effective January 1, 2022, with replacements applied at each loan’s first reset date on or after the switch timeline.

Jul 19, 2026

Upload by Patrick