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IDB launches inaugural $600 million 3-year SOFR linked bonds

The Inter-American Development Bank (“IADB” or “IDB”), Aaa/AAA (Moody’s/S&P), today priced their inaugural $600 million 3-year SOFR-linked floating rate global bond due 16th September 2022.

The issue priced at par, with a coupon equivalent to SOFR + 26bps. This will be calculated using a five-day observation lag on compounded daily SOFR, with no lockout.

This is IDB's inaugural SOFR-linked transaction and represents its commitment to growing the floating rate market away from LIBOR and towards alternative overnight risk-free rates. 

The geographical distribution highlights significant support from investors based in the Americas (86%), while the remaining 14% was allocated to EMEA-based investors.

In terms of investor type, most of the transaction was allocated to banks (54%), followed by fund managers & pension funds (25%) and the remaining 21% to central banks & official institutions.

“The IDB is very excited to issue our inaugural 3yr SOFR bond. Going forward, we hope to build a curve in this market as we have done with Libor FRNs. We are committed to SOFR and expect to be more active as the market develops further.” said Laura Fan, Head of Funding, Inter-American Development Bank.

 

Investor Distribution:

By Geography

 

By Investor Type

 

Americas

86%

Banks

54%

EMEA

14%

Asset Managers

21%

 

 

Central Banks / Official Institutions

21%

 

 

Pension Funds

  4%

 

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  
  • With this issue, the IDB has completed approximately $ 16 billion (78%) of an estimated $ 20.5 billion borrowing program for 2019

 

Bond Summary Terms:

Issuer:

Inter-American Development Bank (Ticker IADB)

Issuer rating:

Aaa / AAA (Moody’s / S&P) (all stable)

Pricing Date:

10 September 2019

Settlement Date:

18 September 2019 (T+6)

Issue amount:

$ 600 million

Coupon:

SOFR + 26bps

FRN, Compounded Daily SOFR with 5 Day Observation Lag, no lockout, Quarterly, ACT/360. Short First Coupon from 18 September 2019 to 16 December 2019

Maturity:

16 September 2022

Reoffer Price:

100.00%

Re-offer vs. Compounded SOFR:

+26bps

ISIN

US45818WCP95

Joint lead managers:

Citi, Deutsche Bank, TD, Wells Fargo Securities

 

Joint Lead Manager Quotes:

“This fantastic inaugural transaction underscores IDB’s position as an innovative borrower in the SSA space. By successfully joining the SOFR issuer community, IDB broadened not only its product offering but also its investor base, attracting many new accounts. We are very proud to be part of such a huge step for IDB,” Katrin Wehle, SSA DCM Director at Deutsche Bank.

“With this inaugural SOFR FRN, IDB becomes part of select group of issuers who are taking an early part in the process of transferring to the new reference rate. The deal sets a visible precedent for FRN issuance and makes it possible for investors to access the IDB credit in this format. Citi was delighted to be appointed bookrunner,” Ebba Wexler, Public Sector DCM, Citi.

“Congratulations to the IDB team on their debut SOFR bond. This transaction created the opportunity for investors to gain additional exposure to SOFR in the 3-year part of the curve. By using a coupon structure consistent with other SOFR bond issues, IDB have made an important contribution to the development of liquidity in the SOFR market,” Laura O'Connor, Director, SSA DCM, TD Securities.

“Wells Fargo Securities is delighted to have worked with prestigious borrower Inter-American Development Bank on the supra’s inaugural SOFR FRN transaction. Yet another example of the strong commitment from the supranational community to further develop the nascent SOFR market. A successful affair with solid demand from a wide range of global investors. Our utmost congratulations to the IDB team,” Carlos Perezgrovas, Head of SSA Origination, Wells Fargo Securities, LLC.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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.

Press contact
More Information

Laura Fan
Head of Funding
lauraf@iadb.org
(202) 623 - 3772