News

Inter-American Development Bank Prices AUD 500 Million 5-Year ‘EYE’ Bond

The Inter-American Development Bank (“IADB” or “IDB”), rated Aaa/AAA (Moody’s/S&P), priced a new AUD500 million 5-year fixed rate Kangaroo offering under the Education, Youth, and Employment (“EYE”) Bond program.

The transaction marks IDB’s first Kangaroo ‘EYE’ bond issuance, the proceeds of which will be directed to fund IDB project loans eligible under the EYE Bond program criteria. The projects under this program are designed to promote sustainable growth, poverty reduction and social equity in Latin America and the Caribbean. The Bank’s first issuance under the EYE Bond program came in 2014.

The IDB has a “life cycle” approach to building human capital from early childhood care and education, through formal primary and secondary education. Additionally, the organization provides programs that facilitate labor market placement by improving the transition from school to work through vocational training. Moreover, the organization assist to increase productivity and improve social inclusion of young people throughout key intervention stages.

The deal received a very strong reception from the Australian dollar investor community. More than AUD640 million in orders were received in this transaction from 30 accounts, which reflects the level of recognition the IDB credit enjoys in Australia along with the strong investor interest in the ‘EYE’ bond program. The strength of the order book was underscored by the high participation of global asset managers, which accounted for 50 percent of the final allocation. 

Gustavo De Rosa, CFO of the IDB said: “The EYE Bond reinforces the IDB’s institutional strategy to improve lives in Latin America and the Caribbean. EYE bond proceeds support the Sustainable Development Goals of quality education as well as decent work and economic growth in part by improving teacher training and developing job skills of young people entering the workforce.  This inaugural bond issuance promoted awareness of IDB’s mission to domestic Australian and international investors." 

Altius Asset Management: "We are active supporters of the Sustainable Development Goals, participating in the IADB EYE Bonds is one way we can support that and we are continually impressed with IADB’s work to address the challenge of poverty and inequality in markets they operate in."

Grant Hassell Capital Head of Global Fixed Income, AMP said: “AMP Capital is delighted to support the IADB bond, which will fund much needed early education care and development programs, including helping at-risk youth, for disadvantaged children around the world.  It is a unique and valuable opportunity to support investments that benefit the community while at the same time provide a compelling investment opportunity for our investors.”

QBE: “QBE is delighted to have invested in the inaugural AUD IADB EYE bond. This is exactly the kind of investment we are looking for to enable us to deliver on our ambition to have USD1bn in impact investments by 2021”

QIC: “QIC is delighted to have been a participant in the inaugural AUD IADB EYE bond as ESG specific investments are an important contributor to our portfolios.”

Mark Whelan, Group Executive for Institutional Banking, ANZ said: “ANZ is committed to helping tackle complex issues including financial wellbeing, and we are pleased to be supporting the financing of socially positive projects designated under the ‘EYE’ bond program. The growing interest in Environment, Social and Governance (ESG) assets from domestic Australian investors is reflected in this very successful inaugural bond offering.”

Andrew Hinchliff, Group Executive Institutional Banking & Markets, Commonwealth Bank of Australia said: “We are delighted to deliver another new socially responsible offering to Australian dollar investors, who are allocating more and more funds towards environmental, social and governance (ESG) assets. Investor appetite in the bonds has been strong, which reflects the fantastic work that the IADB does in Latin America and the Caribbean.”

Peter Scher, Head of Corporate Responsibility, JP Morgan Chase said: “J.P. Morgan is delighted to have been involved in IADB’s inaugural EYE Bond in Australia, which is the largest A$ SSA Social print to date. It is critical that we continue to support efforts like this that can meaningfully tackle global economic and social challenges.”

The transaction pays a semi-annual coupon of 1.95% and matures on April 23, 2024. It priced with a spread of 35 basis points over A$ semi-quarterly coupon matched asset swap, which represents a yield of 1.965% s.a.

Distribution Summary:

By Geography

By Investor Type

Australia

50%

Asset Managers

50%

APAC

37%

Central Banks/Official Institutions

30%

EMEA

11%

Banks

10%

Americas

2%

Insurance/Corporates

10%

Bond Summary Terms:

Issuer

Inter-American Development Bank (“IADB”)

Issuer rating

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

Amount

AUD 500 million

Settlement date

23 April 2019

Maturity date

23 April 2024

Issue price

99.929%

Coupon

1.950% payable semi-annually in arrears

Re-Offer Spread

Semi/quarterly coupon matched swap +35 bps (+50.5 bps over Government Benchmark)

Coupon Payment Dates

Each 23 April and 23 October including the Maturity Date

Denomination

AUD 1,000 - Minimum consideration for investors in Australia is AUD 500,000

Listing

Not Listed

Clearing system

Austraclear / Euroclear / Clearstream

Joint lead managers

ANZ, CBA, and JP Morgan

ISIN

AU3CB0262483

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. The IDB is the leading source of multilateral financing for Latin America and the Caribbean.

Press contact
More Information

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