IDB launches $3.5 billion 5-year Fixed Rate Bond

Washington, D.C., January 6, 2021 – The Inter-American Development Bank (“IDB” or “IADB”), rated Aaa/AAA (Moody’s/S&P), priced a new $3.5 billion 5-year Global benchmark.

The transaction pays a semi-annual coupon of 1.500% and matures on 13th January 2027. It was priced with a spread of 22 basis points over SOFR mid-swaps, which equates to 8.28 basis points over the 1.250% UST due December 2026 and carries a semi-annual yield of 1.552%.

The transaction is IDB’s first benchmark of the new year across all currencies and represents IDB’s first 5-year benchmark since April 2021 after issuing a 10-year $4 billion SDB Global benchmark in January 2021, a $3 billion 7-year in July 2021 and a $3.5 billion 3-year in September 2021.

Despite the release of the FOMC minutes on the day of announcement, which led to increased market volatility including a sell-off in both US Treasuries and equities, IDB attracted strong investor demand from the outset. Indications of Interest (“IOIs”) stood in excess of  $3.4 billion when books officially opened and grew steadily from there, achieving a final orderbook in excess of $5 billion upon books closing, enabling IDB to price a $3.5 billion sized transaction.

The success of this deal reflects the strong following the IDB credit enjoys with investors globally while emphasizing its quality in the face of market volatility. The strength of the orderbook was underscored by high participation from Banks/Bank Treasuries and Central Banks /Official Institutions that accounted for 47% and 37% of the final allocation, respectively.

“This trade kicks off our 2022 borrowing program.  Strong demand from high-quality investors like central banks/official institutions and bank treasuries propelled demand to over $5 billion and allowed us to issue a $3.5 billion transaction.  A 5-year transaction allowed us to capture broad based demand while placing a solid point on our USD benchmark curve for 2022.”
Laura Fan, Head of Funding, IDB

Investor Distribution:

Bond Summary Terms:

Joint Lead Manager Quotes:

“IDB opened the new year in record-breaking fashion, pricing its $3.5 billion 5-year at its lowest ever spread over US Treasuries for a 5-year new issue. Staying true to tradition, IDB was nimble in accessing primary markets to kick-off January and jump start its anticipated $22 billion program for 2022. A high quality orderbook anchored by bank treasuries and central banks paved the way for the deal to tighten and price flat to IDB’s secondary curve. Congrats to IDB Treasury, BMO was thrilled to be involved!”
Sean Hayes, Head of US Syndicate & Credit Sales, BMO Capital Markets.

“IDB’s first USD benchmark of 2022 was perfectly timed with clinical execution. A long and diverse list of investors once again provided a strong endorsement of IDB’s credit quality and mission allowing the new issue to price virtually flat to their outstanding curve.”
Jigme Shingsar, Managing Director, RBC

“A solid first 2022 benchmark outing for IDB. The issuer was able to secure strong orderbook momentum which allowed for a 2bp price tightening and a $3.5 billion deal size. Demand from accounts showed limited price sensitivity, with a high quality final orderbook anchored by Central Bank & Official Institutions.”
Adrien de Naurois, Managing Director, Head of SSA DCM & EMEA Investment Grade Syndicate

“Congratulations to the IDB team to a stellar outcome to their first USD benchmark of the year. The transaction was met with strong demand from the global investor community allowing for a pricing flat to the IDB secondary curve. With a spread of +8.28bps over Treasuries, the deal priced at the tightest treasury spread for a 5-year IDB Global ever. Citi is delighted to have been involved.”
Ebba Wexler, Managing Director, Public Sector DCM, Citi