Client Stories

IADB’s successful return to Sterling market with £500m Bond

Improving lives in Latin America and the Caribbean

The Inter-American Development Bank (IADB) is the leading source of development finance for Latin America and the Caribbean. Dating back to 1959, the IADB provides loans, grants and technical assistance for countries seeking to reduce poverty and inequality by improving health services, education and infrastructure. 

The bank aims to achieve development in a sustainable, climate-friendly way, with its Institutional Strategy, Corporate Results Framework (CRF), and Environmental & Social Policy Framework (ESPF) guiding the organisation’s overall approach to sustainability. Together, the IADB’s sustainability initiatives cover all 17 UN Sustainable Development Goals (SDGs).

To share the results and impact of its work with its stakeholders, the IADB produces an annual Development Effectiveness Overview (DEO). The report, which is in line with the standards set out in the Global Reporting Initiative (GRI), includes Corporate Performance Indicators and Project Completion Report ratings by an external, independent verifier.

Robust demand despite volatile market conditions

Following their £500 million Sustainable Development Bond (SDB) in April this year, the Inter-American Development Bank was looking to launch its third SDB and asked NatWest to support in the role of Joint Lead Manager (“JLM”). In October 2019, IADB had launched its inaugural Sustainable Development Bond in the Sterling market, a £275 million 7-year fixed rate note, for which NatWest also acted as JLM.

After a challenging period for Sterling issuance, the IADB and NatWest identified a window in which to launch their transaction, a fixed rate benchmark maturing July 2027. Getting the timing right in the middle of volatile markets paid off: investors showed their support right from when books opened, with the final order volume reaching more than £560 million. Backed by the robust investor demand, the IADB set the bond’s size at £500 million, with a final spread of UKT+68bps, equating to a coupon of 2.500%.

With 67%, UK investors took the majority of the allocation, followed by Asian investors, who represented a notable share of 13%. Looking at investor types, Asset Managers, Pension and Insurers took 52%, followed by Banks at 29%, and Central Banks and Official Institutions at 19%.

The net proceeds from the bond will contribute to the capital resources of the bank and will support IDB’s work to reduce poverty and inequalities in Latin America and the Caribbean.

NatWest committed to help eradicate poverty in a sustainable manner

Kerr Finlayson, Head of Syndicate – Frequent Borrower Group, NatWest, commented: “We are delighted to have had the opportunity to support the IADB with their third Sterling Sustainable Development Bond. The strong investor support, despite challenging markets, is testament to the IADB’s high-quality credit and its ambitious sustainability strategy. This issuance reflects NatWest’s commitment and focus on supporting sustainable development, and we are proud to help the IADB advance its mission to eradicate extreme poverty in a sustainable manner.”

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