KOTAMRAJU We seek to accommodate demand from investors across the curve, including issuance in 1-2 year maturities and of floating-rate notes (FRNs). We also have an ECP programme for short-term issuance under one year.

DAY We have found SSA issuance of FRNs very useful in the last couple of years. I’m not sure how expensive this is for issuers, but it is very easy for us to invest in these as rates go up rather than buying and continually rolling over short-term debt.

DORE Our capacity to issue short-dated bonds is limited due to ALM [asset liability management] considerations but we do issue from time to time. We have issued sizeable short-dated bonds in FRN and fixed-rate formats. We believe it is important to provide our investors access to our paper across the curve.

We are also very active in the very short end of the curve for IBRD [International Bank for Reconstruction and Development – World Bank] and IDA [International Development Association]. IBRD has an active discount notes programme in US dollars with outstanding size ranging between US$10-15 billion and IDA has a multicurrency short maturity programme, referred to as IDA Bills, with outstanding size of US$3-5 billion. Though we can issue up to one-year maturity for both programmes, the average issuance maturity tends to be 3-6 months.  

DAY That’s good to hear, because there aren’t many triple-A rated credits that issue FRNs in size. We like these deals for the diversification they offer.

MORGAN When the first decent amount of SOFR [secured overnight financing rate]-linked FRNs were issued back in 2021, we saw FRNs trade through fixed-rate notes. But they have been trading back for a while now. This helps explain why we haven’t seen so much FRN issuance this year.

DORE World Bank has issued more than US$20 billion of SOFR-linked transactions at various maturity points out to 15 years, starting with IBRD’s first two-year in 2018 and with the most recent dual-tranche issuance – 4.5 and seven years – which raised more than US$3 billion.

However, it is now a bit challenging to issue FRNs because it is difficult to justify the pricing differential – it is much cheaper now to issue in fixed-rate format than in FRN format. Nevertheless, we will continue to look for opportunities to issue in the FRN market as soon as the levels get in line with fixed-rate options.  

DAY For us it is the FRN format, rather than the spread, that’s helpful. Even if an FRN is 10 basis points more expensive than a fixed-rate note, the FRN gives us flexibility and diversification.

SEVERINO Very short-dated ECP is attractive to us. We prefer bills and investment grade corporate credit for shorter duration, especially given we are being more defensive as we are thinking about recession. When it comes to SSAs, we are generally happy to take more duration.