If you are an interested bidder and have a question that is not addressed below or in other sections of the PAF website, please e-mail it to PAF_Secretariat@worldbank.org and it will be added here.
This page is for information only. Please see the disclaimer.
| Question D.1 | If I am an auction winner, how does my company purchase the World Bank puttable bond? |
| The World Bank’s Global Agent will conduct a private placement. Your company must retain a bank or financial institution that has access to bond clearing system (“Clearstream” and/or “Euroclear”) to serve as your custodian by purchasing and holding the bonds on your company’s behalf. The custodian will also transfer any outstanding balance due as part of the purchase of the puttable bonds (net of the bid deposit). See D6 for more information about custodian banks. | |
| Question D.2 | How does my company trade the World Bank puttable bond? |
| If you are interested to buy or sell the puttable bond you must first identify your counterparty, agree with your counterparty on trade price and volume, and then send instructions to your respective custodian banks to transfer the puttable bonds at the agreed price. The World Bank will publish the auction results to facilitate search of potential counterparties, but will not be involved in the trading of the bonds. The bonds are not linked to any specific CDM projects and can be freely traded. | |
| Question D.3 | Who is the counterpart to the options? |
| The World Bank, specifically the International Bank for Reconstruction and Development, will issue the puttable option bond and will be the counterpart. The bonds will be called the Pilot Auction Facility Emission Reductions Notes or PAFERNs. | |
| Question D.4 | Is it possible to pay and get paid in any currency? |
| The PAF premium and strike price will be payable and paid in USD only. | |
| Question D.5 | Is there a contract to be signed between auction winners and the PAF that will govern the rules of the put option auction, delivery and payment obligations? What will be the legal jurisdiction of these documents? |
| Yes, the PAF requires bidders to execute a Participation Agreement which governs their participation to the auction and their purchase of the PAFERNs. The Participation Agreement is a part of the Bidder Application Package. A copy of the Bidder Application Package and the PAFERNs draft final terms can be obtained by sending an e-mail to the PAF_Secretariat@worldbank.org. The email must contain disclaimer language cut and pasted from this webpage. Both the Participation Agreement and the PAFERNs are governed by English law. | |
| Question D.6 | Will the PAF publish a list of banks or financial institutions serving as project's custodian to purchase and hold the bonds? Who will bear the cost of this service? |
| The PAF has contacted financial institutions that may be able to provide custodian services for interested parties. BNP-Paribas and CITI have shared their contact details which can be obtained by requesting the Bidder Application package. In addition interested parties may wish to engage with their usual financial intermediaries to see if they are able to provide custodian services. The cost will be the responsibility of the put option holder. | |
| Question D.7 | Where do I view the terms of the Puttable Bond? |
| The Puttable Bond draft terms will be shared with interested parties that send an e-mail to the PAF_Secretariat@worldbank.org. The email must contain disclaimer language cut and pasted from this webpage. | |
| Question D.8 | Will it be possible to register for the auction with my agent/custodian or access to a Clearstream/Euroclear account ‘in progress’? And will it be possible to delay delivery of the bond until the custodian account or direct access to Clearstream/Euroclear is set up? |
| In order to purchase, hold, and redeem the bonds, investors will need a securities account with at least one of the two clearing systems (Euroclear or Clearstream) either directly or through an agent/custodian. While it will be possible for a bidder to register and compete in the auction without having such an account, they will need one prior to the Issue Date in order to take delivery of the bond. The Issue Date will take place several weeks after the auction, details of which can be found in the Bidder Application Package. It will not be possible to delay the Issue Date for any one bidder. | |
| Question D.9 | Why is a custodian account needed? Why is the PAF not issuing a legal document instead of the PAFERN bond? |
| Having a custodian account is the standard way to hold bonds in financial markets. Using a standard financial instrument such as a bond, rather than a bespoke contract, makes it easier for entities to hold, sell and purchase the price guarantee after the auction. This enables a bond holder to trade the PAFERN bond, for instance in case he is unable to source the necessary CERs before the Maturity Date. | |
| Question D.10 | What happens if the Successful Bidder does not establish an Eligible Custodian by the deadline? Is he entitled to his full deposit back? |
| The establishment of an Eligible Custodian Account is an obligation that needs to be met by all Successful Bidders. The failure to establish and Eligible Custodian Account and notify the IBRD of the details of such account will result in a Bidder Default under the Participation Agreement (Clause 7.1.1). | |
| Question D.11 | If I am holding PAFERNs to redeem 100,000 CERs per year for 5 years can I source my CERs from more than one project in any given year? |
| Yes. The 2,000 CERs make up one CER Lot. The requirement is that each CER Lot must contain CERs that are homogeneous, i.e., from the same project or PoA and have the same issuance date. In the question posed, the holder will have 50 CER Lots and can thus redeem different CERs any one Maturity Date that are sourced from different projects or PoAs. | |
Disclaimer:
THE FOLLOWING IS A SUMMARY OF THE WORLD BANK’S PROPOSED PLAN TO ISSUE PILOT AUCTION FACILITY EMISSION REDUCTIONS NOTES (“PAFERNS”). IT IS NOT AN OFFER TO SELL PAFERNS OR AN INVITATION TO OFFER TO BUY PAFERNS. THIS SUMMARY IS SEPARATE FROM, AND SHOULD NOT BE READ IN COMBINATION WITH, ANY FUTURE OFFER OR SALE OF PAFERNS, WHICH WILL BE MADE IN COMPLIANCE WITH APPLICABLE LAWS AND UNDER ENTIRELY SEPARATE LEGAL DOCUMENTATION AND OFFERING MATERIALS. THIS SUMMARY IS VERY HIGH LEVEL FOR SIMPLICITY AND LEAVES OUT MATERIAL INFORMATION AND THE LEGAL DOCUMENTATION THAT IS EXPECTED TO GOVERN THE PAFERNS. FURTHER, IT IS CURRENT ONLY AS OF THE DATE OF POSTING TO THIS WEBSITE AND IS LIKELY TO BECOME OUTDATED AS THE PAFERNS LEGAL DOCUMENTATION IS DEVELOPED. THE STRUCTURE, TIMING AND MECHANICS OF THE ACTUAL PAFERNS, IF AND WHEN THEY ARE ISSUED, ARE SUBJECT TO CHANGE. POTENTIAL INVESTORS MUST OBTAIN A COPY OF THE COMPLETE LEGAL DOCUMENTATION PURSUANT TO WHICH THE PAFERNS WILL BE ISSUED, INCLUDING THE WORLD BANK’S MAY 2008 PROSPECTUS RELATING TO ITS GLOBAL DEBT ISSUANCE FACILITY AND THE FINAL TERMS FOR ANY ISSUANCE OF PAFERNS. POTENTIAL INVESTORS SHOULD NOT RELY ON THIS SUMMARY. BEFORE MAKING ANY INVESTMENT DECISION, POTENTIAL INVESTORS MUST REVIEW THE COMPLETE LEGAL DOCUMENTATION (ONCE AVAILABLE).
Last update -- June 15, 2015
