IDB Launches $3 Billion 7-Year Fixed-Rate Sustainable Development Bond

The Inter-American Development Bank (“IDB” or “IADB”), rated Aaa/AAA (Moody’s/S&P), priced a new $3 billion 7-year Global Sustainable Development Bond benchmark.

The transaction pays a semi-annual coupon of 3.500% and matures on 14th September 2029. It was priced with a spread of +46 basis points over SOFR mid-swaps, which equates to +21.6 basis points over the 3.125% UST due August 2029 and carries a semi-annual yield of 3.594%.

The transaction marks IDB’s third USD Global Fixed Rate offering of the year and represents IDB’s first 7-year fixed rate benchmark since July 2021 after issuing a 5-year $3.5 billion benchmark in January 2022 and 2-year $2 billion benchmark in June 2022.

Despite a busy new issue calendar, the transaction managed to attract strong investor interest from the outset. Indications of Interest (“IOIs”) stood above $2.1 billion when books officially opened and grew steadily from there, achieving a final orderbook in excess of $3.7 billion, enabling IDB to launch a $3 billion sized benchmark.

The success of this financing highlights the quality of IDB’s credit, as well as the globally diverse and resilient investor base. The orderbook was of particularly high quality, anchored primarily by Bank Treasuries, Central Banks and Official Institutions.

“We are pleased with the resounding reception to our 7-year Sustainable Development Bond. After our successful 2- and 5-year benchmarks, we were looking to extend our curve. We felt confident going ahead due to the lack of comparable long-dated US Dollar supply and indeed, the strong investor demand across geographies allowed us to issue a larger size.  It is a great way to conclude our US Dollar fixed rate global benchmark issuances for 2022.” Laura Fan, Head of Funding of IDB.

Investor Distribution:

Bond Summary Terms:

Joint Lead Manager Quotes:

“Congratulations to the IDB team on another successful USD Sustainable Development Bond, its first venture into the 7-year USD tenor since July 2021. Anchored by bank treasuries and central banks, the Global bond attracted a high quality final orderbook in excess of $ 3.7 billion. This enabled the IDB to tighten pricing by 2bps in a highly competitive new issue market and to achieve the very upper end of size expectations with a US$3 billion print. The transaction marks the one of the largest 7-year dollar fixed rate bonds for a supranational in 2022 so far, and Deutsche Bank is delighted to have supported the IDB in its continued efforts in achieving its Sustainable Development Goals.” Katrin Wehle, Managing Director, SSA DCM Origination, Deutsche Bank.

“Congratulations to IDB on today’s $3 billion 7-year Sustainable Development Bond! Notwithstanding recent market volatility and an active primary session; the issuer reopened the SSA market for longer maturities with another excellently timed benchmark. Strong orderbook momentum allowed the issuer to both upsize and tighten the transaction, showcasing the appeal of the IDB credit. HSBC is delighted to have been involved in this transaction.” Elena Farrell, Director, DCM HSBC.

“After a 4-month pause in supply, IDB has today successfully reopened the market for longer-dated SSA USD issuance. In addition, IDB was able to achieve an impressive $3 billion size, enjoying broad-based sponsorship from global central banks and bank treasuries, demonstrating both the depth and quality of its investor base. Congratulations to the IDB team for such a remarkable result!” Sarah Lovedee, Executive Director, Head of Supranational DCM, J.P. Morgan.

“Congratulations to the IDB team on their new 7-year benchmark transaction. IDB navigated the volatile market backdrop and delivered a safe haven instrument for investors. This transaction confirms that there is a demand for high credit quality duration product, despite the inverted yield curve. IDB's ability to tighten 2bps from IPTs reflects the extensive support that IDB enjoys from a range of global investors.” Laura O'Connor, Managing Director, Fixed Income Origination & Syndication, TD Securities.