IDB Launches $3.25 Billion 2.625% 5-year Fixed Rate Global Benchmark

The Inter-American Development Bank (“IDB” or “IADB”), rated Aaa/AAA (Moody’s/S&P), today priced a new $3.25 billion 5-year global bond.

The transaction pays a semi-annual coupon of 2.625% and matures on 16 January 2024. It priced with a spread of 10.0 basis points over mid-swaps and 17.05 basis points over the 2.625% UST due 31 December 2023, which represents a reoffer yield of 2.740% s.a.

This transaction marks IDB’s first USD fixed-rate benchmark of 2019. Similar to years past, IDB has started their funding program with a USD 5yr Global benchmark. Despite a busy primary calendar, the credit quality of the IDB was evident, as orders reached in excess of $5 billion.

“We were pleasantly surprised at the demand for a finely priced transaction. We were targeting a $3 billion transaction and printed $3.25 billion. Strong demand from Europe pushed the order book to over $5 billion. This trade is a great way to start the 2019 borrowing program,” said Laura Fan, Head of Funding, IDB.

Distribution Summary

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: https://www.iadb.org/en/idb-finance/investors.

Bond Summary Terms:

Joint Lead Manager Quotes:

“Against a changeable macroeconomic backdrop and amidst a busy primary market, IADB once again successfully issued its first deal of the year with a new 5-year benchmark transaction, achieving yet another remarkable result. The deal attracted an orderbook in excess of USD5bn, with a number of high quality central bank and bank treasury investors.  This allowed for a $3.25bn deal size, at a price that offers some performance potential for investors, yet a minimal concession for the issuer’s costs.  IADB has laid out an impressive foundation to the 2019 funding programme.”

Lee Cumbes, Head of Public Sector EMEA, Barclays

“Another great IADB 5-year to kick off their annual programme with a substantially oversubscribed orderbook despite pricing at minimal concession to their curve. IADB should be commended for their transparent benchmark issuance policy which generates rarity value and strong investor support. The quality of this orderbook was such that a larger volume was certainly achievable but the issuer chose to target maximizing the opportunity for secondary performance.”

Jamie Stirling, Global Head SSA DCM, BNP Paribas

“IADB has once again been able to take advantage of a clear execution window to generate a high quality and oversubscribed orderbook. Pricing was impressive, with a minimal new issue premium and was also IADB's tightest spread to Midswaps for a 5yr benchmark since 2015, highlighting the broad appeal of its credit.”

Hector Snuggs, Director, Debt Capital Markets, HSBC

“IADB kicks off its funding year with an impressively oversubscribed book on a USD 3bn 5-year Global transaction.  The issuer taps into pent-up USD demand at the beginning of the year, appealing to a broad spectrum of investors dominated by central banks, official institutions and bank treasuries.  Final pricing of mid-swaps +10bps represents a minimal new issue concession, and in the context of which the $5bn+ final book size is a testament to IADB’s credit quality, name recognition and loyal investor following.”

Keith Price, Head of SSA Syndicate, J.P. Morgan