The Inter-American Development Bank (“IDB” or “IADB”), rated Aaa/AAA (Moody’s/S&P), priced last week a new CAD 500 million 7-year Global Sustainable Development Bond raising awareness for the United Nations’ Sustainable Development Goal #3: Good Health and Well-being.
The transaction pays a semi-annual coupon of 0.875% and matures on 27 August 2027. It priced with a spread of 50.7 basis points over the 1.00% CAN due 1 June 2027, which represents a yield of 0.965% s.a.
This transaction marks IDB’s first CAD fixed-rate benchmark of 2020. The new line was the first CAD 7-year Sustainable Development Bond ever and first in the tenor from a non-Canadian domiciled SSA borrower since 2014. Additionally, the transaction stands as the IDB’s longest-dated CAD new issue since 2007.
“Strong investor demand for Environmental, Social and Governance (ESG) investments coupled with a supportive backdrop for issuance gave us confidence to go ahead. Indeed, we saw a record number of investors involved for an IDB Canadian dollar denominated bond. It is the IDB’s ninth transaction this year highlighting SDG#3 and the first to specifically target the domestic Canadian market. Now more than ever, the Latin America and Caribbean region needs support in mitigating the impact of the ongoing pandemic.” said Laura Fan, Head of Funding, IDB.
Investor Distribution:
| By Geography | By Investor Type | |||
| Canada | 53% | Banks | 46% | |
| Asia & Pacific | 27% | Asset Managers | 32% | |
| EMEA | 16% | Central Banks / Official Institutions | 13% | |
| USA | 4% | Pension Funds / Insurance / Corp | 9% |
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:
Bond Summary Terms:
| Issuer: | Inter-American Development Bank (Ticker IADB) |
| Issuer rating: | Aaa / AAA (Moody’s / S&P) |
| Amount: | CAD 500 million |
| Settlement date: | 27 August 2020 (T+10) |
| Coupon:Coupon payment dates: | 0.875%27 February and 27 August (semi-annual) |
| Maturity date: | 27 August 2027 |
| Issue price: | 99.392% |
| Issue yield: | 0.965% s.a. |
| Reoffer spread: | Mid Swaps +5 / CAN +50.7 |
| Listing: | London Stock Exchange |
| Clearing systems: | CDS, Clearstream, Euroclear |
| Joint lead managers: | BMO Capital Markets / BofA Securities / Scotiabank |
| Co-lead managers: | N/A |
| CUSIP / ISIN: | 458182EC2 / CA458182EC20 |
Joint Lead Manager Quotes:
“A statement transaction by the IDB in Canadian Dollars, in support of the Bank’s development mission, with a focus on improving health. Innovation was on showcase. This marks the first ever international SSA to issue a 7-year CAD Sustainable Development Bond, including the first in the maturity in over 5 years, which suited Canadian and global ESG focused investors well.”
Sean Hayes, Managing Director, Head of US Syndicate, BMO Capital Markets.
“A superb return by the IDB to the Canadian dollar market, once again demonstrating the broad investor appeal of their Sustainable Development Bond Framework. The transaction highlighting Good Health and Well Being is particularly timely given the current global backdrop and the ability to upsize in this less traditional maturity is a testament to IDB’s consistent investor relations programme. Congratulations to the team.”
Adrien de Naurois, SSA Syndicate, BofA Securities.
“Scotiabank is proud to support the IDB in its second CAD Sustainability Bond targeting UN Sustainable Development Goal #3: Good Health and Well-being. We are committed to assisting clients by mobilizing capital in Latin America while playing a driving role in the ongoing expansion of the Canadian dollar issuance market. The IDB is a market leader in sustainable financing and this 7-year bond issue resulted in strong involvement of the domestic ESG investment community in Canada.”
Cesare Roselli, Global Head of SSA (Sovereign, Supranational, and Agency) Origination, Scotiabank.
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. 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.