IDB launches $3.5 Billion 3-year Fixed Rate Bond

The Inter-American Development Bank (“IDB” or “IADB”), rated Aaa/AAA (Moody’s/S&P), priced a new $3.5 billion 3-year Global benchmark.

The transaction pays a semi-annual coupon of 0.500% and matures on September 23, 2024. It was priced with a spread of 14 basis points over SOFR mid-swaps, which equates to 8.6 basis points over 0.375% UST due September 2024 and carries a semi-annual yield of 0.525%.

IDB has taken an active approach in supporting the transition away from Libor, becoming one of the first issuers to market and price a fixed rate USD issuance vs SOFR mid-swaps.

This transaction marks IDB’s 4th fixed-rate benchmark in the USD market for 2021 having issued one 10-year $4 billion SDB Global benchmark in January, a $4.25 billion 5-year in April and a $3 billion 7-year in July.

The transaction received strong investor momentum from the outset with Indications of Interest (“IOIs”) in excess of $2.8 billion, and final demand above $5 billion (excluding JLM interest) which allowed the deal to be successfully upsized, from the originally planned $3 billion, to $3.5 billion.

The success of this transaction reflects the strong following the IDB credit enjoys with investors globally. The strength of the order book was underscored by the high participation of Central Banks and Official Institutions which accounted for 63% of the final allocation.

“With this deal, we have successfully accessed the major points of the US dollar curve in 2021.  Strong demand from the Americas generated momentum as we went into London open and as the book continued to grow, it enabled us to upsize from the originally planned $3 billion.  This was also our first trade marketed relative to SOFR and the transition process went smoothly.  An excellent outcome!” Laura Fan, IDB Head of Funding.

Investor Distribution:

Bond Summary Terms:

Joint Lead Manager Quotes:

“Congratulations to the IDB team for yet another successful USD benchmark Global transaction – tapping into strong demand from high-quality investors, while also showing support for the transition away from Libor with their first new issue marketed vs SOFR Mid-Swap. Demand from central bank and official institutions in the US and globally was particularly noteworthy, highlighting the breadth and depth of IDB’s investor reach, even at impressively tight spreads vs both USTs and mid-swaps.” Sarah Lovedee, SSA DCM, J.P. Morgan.

“IDB took advantage of a clear issuance window and constructive market conditions to print a highly successful 3-year global benchmark. The bond attracted a high quality international orderbook, showcasing the appeal of the IDB credit across the curve. IDB have shown proactivity in supporting the transition away from Libor, by marketing and pricing this transaction vs SOFR mid-swaps, and have achieved a fantastic outcome. HSBC is delighted to have been involved on this transaction.”  Asif Sherani, Head of DCM Syndicate, EMEA at HSBC.

“Another great outing in the US Dollar market for IDB, who once again demonstrated their status as a leading SSA issuer with its first USD benchmark referencing SOFR MS. Notwithstanding a very busy primary environment, the strong orderbook momentum allowed the issuer to both upsize and tighten the transaction while securing a high quality final orderbook in excess of US Dollar 5 billion.” Adrien de Naurois, Managing Director, Head of SSA DCM & EMEA Investment Grade Syndicate.

“IDB has once again proven its exceptional standing in the global capital markets with a 3-year USD benchmark that attracted the highest quality demand globally, resulting in an orderbook over USD 5 billion. Additionally, this is IDB's first fixed-rate USD transaction that references SOFR Mid-Swaps as part of the LIBOR transition initiative and we are honored to have been a joint lead manager on this landmark transaction.” Laura O'Connor, Managing Director, Fixed Income Origination & Syndication, TD Securities.