Proceeds from GBP275 million transaction will finance IDB projects aligned with the Sustainable Development Goals.
The Inter-American Development Bank (IDB or IADB), rated Aaa/AAA (Moody’s/S&P), priced a new GBP275 million 7-year fixed rate l Sustainable Development Bond (“SDB”).
This transaction represents the IDB’s second SDB issuance, following the inaugural CAD600 million 5-year deal priced just last week. The proceeds of this transaction will be directed to support sustainable development in IDB’s member countries aligned with the Bank’s strategic priorities to reduce poverty and inequalities in Latin America and the Caribbean by promoting economic and social development in a sustainable, climate friendly way. Each strategic priority of the IDB aligns to at least one of the United Nations Sustainable Development Goals (SDGs), with all goals covered within the IDB institutional strategy, which may be adapted from time to time should the United Nations SDGs definition evolve. With this Sustainable Development Bond, the IDB raises awareness for SDG#11: Sustainable Cities and Communities, which aims to make cities and human settlements inclusive, safe, resilient and sustainable by 2030.
“The IDB is pleased to issue its first ever sterling denominated Sustainable Development Bond. This bond fosters awareness amongst investors of IDB’s commitment to the UN Sustainable Development Goals and how IDB embraces sustainability as a core element of its work in Latin America and the Caribbean. There is a growing interest from the UK institutional investors for ESG products. This deal met that demand while extending IDB’s curve in the sterling market,” said Laura Fan, Head of Funding of the IDB.
"A highly successful transaction that adds sterling as IDB's second SDB issuance. The diverse orderbook demonstrates the broader demand for IDB SDBs and allowed IDB to extend their sterling curve with a minimal term premium. Citi was delighted to be involved," said Ebba Wexler, Director, Public Sector DCM, Citi.
“A superb result for IDB who successfully launched their second ever Sustainable bond. The strong uptake from investors attracted by the Sustainability element is a reflection of the unique aspect of this deal, with the Sustainable element a rarity in GBP. J.P. Morgan are delighted to be involved in this special transaction,” said Matthieu Batard, Head of SSA Syndicate, J.P. Morgan.
“NatWest Markets are proud to have been part of IDB’s first SDB issuance in sterling. We have seen an increased focus on ESG across the investor base, particularly from UK accounts and this was evidenced in the strong take up. It was also good to see some large orders out of the Asian region confirming the broad investor diversification versus a standard vanilla print for ESG product,” said Kerr Finlayson, Head of SSA Syndicate, NatWest Markets.
“We have actively been encouraging companies and other borrowers to issue social and sustainability bonds and have been supporters of the EYE bonds in the past. We are pleased to see the success of the inaugural sustainability bond issued this week contributing towards the growth we are seeing in specific use of proceeds bond issuances. We particularly value the liquidity that a large issue such as this one provides, whilst at the same time supporting the goals and outcomes, we’re trying to achieve through our social bond strategies. We’re seeing increasing interest from our client for investment solutions that have social and economic benefits while at the same time providing an opportunity for return, bringing social investment into the mainstream,” said Simon Bond, Portfolio Manager at Columbia Threadneedle Investments.
Investor Distribution
Geographic Region
UK
69%
APAC
28%
Europe (ex-UK)
3%
Investor Type
Banks
47%
Asset Managers
33%
Pension Funds/Insurance
11%
Central Banks/Official Institutions
9%
The new issue carries an annual coupon of 0.500% and will mature on September 15, 2026. It was priced with a spread of 43 basis points over the 1.5%UKT due July 22, 2026. The pricing translates to a semi-annual yield of 0.612%.
Bond Summary Terms*
Issuer: Inter-American Development Bank
Issuer rating: Aaa/AAA
Amount: GBP 275 million
Settlement date: October 22, 2019
Coupon: 0.500%
Coupon payment dates: Annually in arrear, with first short coupon on 15 September 2020
Maturity date: September 15, 2026
Issue price: 99.240%
Denominations: £1,000
ISIN: XS2065728177
Listing: London Stock Exchange
Clearing system: Euroclear, Clearstream
Joint lead managers: Citi, J.P. Morgan, NatWest Markets
*This press release is not an offer for sale of the securities of the Inter-American Development Bank. Any offering of IDB securities will be made only by means of a prospectus or other definitive offering document that contains important information about the securities, the offering and IDB. Offerings of securities will be made only in compliance with applicable laws.
About the IDB
The Inter-American Development Bank is a multilateral financial institution supporting Latin America and the Caribbean’s efforts to reduce poverty and inequality, and to bring about development in a sustainable, climate-friendly way. Established in 1959, it is the leading source of development financing for Latin America and the Caribbean, with a strong commitment to achieving measurable results.