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IDB Launches $2 billion 0.875% 5-year Fixed Rate SDB Global Benchmark

The Inter-American Development Bank (“IDB” or “IADB”), rated Aaa/AAA (Moody’s/S&P), today priced a new $2 billion 5-year sustainable development bond (SDB) global benchmark.

The transaction pays a semi-annual coupon of 0.875% and matures on April 3rd, 2025. It priced with a spread of 46.2 basis points over the 0.500% UST due March 31st, 2025, which represents a yield of 0.885% s.a.

This issuance follows IDB’s recent announcement that it would make up to $12 billion available to countries requesting support for the COVID-19 pandemic and its consequences. The IDB will concentrate support in four main areas: 

  • The Immediate Public Health Response: Support for countries’ preparedness and response capacities to help contain the transmission of the virus and mitigate its impact, with resources to strengthen public healthcare systems and purchase supplies and equipment.
  • Safety Nets for Vulnerable Populations: Measures to protect the income of the most affected populations through existing transfer programs, non-contributory pensions and grants. Other proposed measures include extraordinary transfers to workers in the informal sector and support for companies in sectors particularly affected by the crisis, such as tourism.
  • Economic Productivity and Employment: Assistance to SMEs, which account for 70% of the region’s jobs, through financing programs and short-term liquidity guarantees, foreign-trade financing and guarantees, loan restructuring, and support for strategic supply chains.
  • Fiscal Policies for the Amelioration of Economic Impacts: Support to countries in designing and implementing policies in three key areas: fiscal measures to finance the response to the crisis; continuity plans for the execution of expenditures and public procurement; and measures to support economic recovery.

This is IDB’s first public bond issuance following the break in USD supply after days of turbulence in financial markets caused by the COVID-19 outbreak.

“We are delighted to have issued our largest Sustainable Development Bond (SDB) to date after announcing a combined amount of up to $12 billion to support our borrowing member countries in their efforts to fight the COVID-19 pandemic. As such, this bond focuses on the United Nations Sustainable Development Goal (SDG) 3 – ensure healthy lives and promote well-being for all at all ages. IDB is thankful to all investors for their extraordinary support in this unprecedented health crisis,” said Laura Fan, Head of Funding, IDB.

Investor Distribution:

By Geography

By Investor Type

Asia & Pacific

46%

 

Central Banks / Official Institutions

72%

Americas

28%

 

Banks

14%

EMEA

26%

 

Asset Managers

11%

 

 

 

Pension Funds / Insurance / Corp

3%

Overview of the IDB:

  • The IDB is a multilateral development institution established in 1959.
  • It is the largest government owned regional source of development finance for Latin America and the Caribbean.
  • The IDB is owned by 48 countries, including 26 Latin American and Caribbean countries and 22 non-borrowing member countries.
  • Information on bonds for investors is available on the IDB website:

http://www.iadb.org/investors

Bond Summary Terms:

Issuer:

Inter-American Development Bank (Ticker IADB)

Issuer rating:

Aaa / AAA (Moody’s / S&P)

Amount:

USD 2 billion

Settlement date:

03 April 2020 (T+5)

Coupon:

Coupon payment dates:

0.875%

03 October and 03 April (semi-annual)

Maturity date:

03 April 2025

Issue price:

99.951%

Issue yield:

0.885% s.a.

Reoffer spread:

Mid Swaps + 37 / CT5 +46.2

Listing:

London Stock Exchange

Clearing systems:

Fedwire, Euroclear, Clearstream

Joint lead managers:

Credit Agricole CIB / Deutsche Bank / Goldman Sachs International / JPMorgan

ISIN / CUSIP:

US4581X0DL95 / 4581X0DL9

Joint Lead Manager Quotes:

“This transaction will certainly be remembered as one of the most remarkable trades in the SSA market this year. The high quality and multiple times oversubscribed order book benefited from broad-based demand from investors focused on the fact that it was a sustainable development bond targeted at fighting the current pandemic. We are delighted to be involved in this landmark transaction that attests to the IDB’s mission to address development issues across Latin America and the Caribbean.”
Katrin Wehle, Director, DCM SSA at Deutsche Bank

“Amidst a continued volatile and uncertain market environment, IDB secured invaluable resources with this new 5yr Sustainable Development Bond, as part of its efforts to fight the COVID-19 outbreak. It is truly inspiring to see the global investor community come together to support such a necessary cause and we were incredibly pleased to have contributed to this landmark transaction.”
Maud Le Moine, Head of SSA DCM at Goldman Sachs

“Following weeks of volatility, IDB today reopens the USD mid-curve with an impressive 5-year Sustainable Development Bond.  The highly oversubscribed book (~2.5x) is a testament to IDB’s solid global investor following even amid uncertain market conditions, and enables the issuer to take out the maximum size of $2 billion very shortly after its announcement of dedicated resources to help member countries fight the COVID-19 outbreak.  A timely and decisive move - well done to the IDB Treasury team!”
Keith Price, Managing Director, Head of Frequent Borrower Group, J.P. Morgan

“Through its inaugural USD Sustainable Development Bond, IDB puts at the forefront its mission to support the fight against the COVID-19 outbreak throughout Latin America and the Caribbean. Credit Agricole CIB is honored to have contributed to this milestone transaction, the success of which was driven by IDB’s essential role in the region.”
Pascale Forde-Maurice, Executive Director, Sustainable Banking, Crédit Agricole CI

About the IDB

The Inter-American Development Bank is a multilateral financial institution supporting Latin America and the Caribbean’s efforts to reduce poverty and inequality, and to bring about development in a sustainable, climate-friendly way. Established in 1959, it is the leading source of development financing for Latin America and the Caribbean, with a strong commitment to achieving measurable results.Since becoming the first Asian member country of the IDB in 1976, Japan has been involved in IDB projects through a number of funds and programs.

External Contacts

Andrea Ortega

Andrea Ortega
Additional Contacts

Fan,Laura Emily

Fan,Laura Emily
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