IIC’s Debut Global Bond Offering Oversubscribed
Multilateral increases its original US$300 million bond offering amount to US$350 million and secures a lower rate fueled by demand from 34 top-tier global investors
Washington, D.C., November 15, 2012 — The Inter-American Investment Corporation (IIC), a Washington, D.C.-based multilateral agency that provides financing and technical assistance to small and medium-sized enterprises in Latin America and the Caribbean, placed a 3-year, US$350-million debt bond on Thursday, November 8. At closing, registered offers totaled nearly US$450 million. This successful bond offering is the IIC’s first on the global financial markets.
The bond, sold by a consortium of banks—Daiwa, Deutsche Bank, J.P. Morgan, and Mizuho—matures in November 2015. Interest payments will be made quarterly at a floating rate of 35 basis points over the LIBOR rate.
“The IIC sees the results of today’s bond offering as a pivotal event in its institutional life,” noted Orlando Ferreira, chief of the IIC’s Finance and Strategic Planning Division. “As a first-time issuer in this market, we are extremely pleased by the extraordinary support we have received from a large and select number of investors.”
The bond issue provided the IIC with an opportunity to showcase its institutional quality. The success of the placement will also help to strengthen the IIC’s mandate of supporting enterprises that have difficulty accessing financing. “We are not a typical multilateral,” Ferreira noted. “We work primarily with medium- and small-sized companies and our exclusive mission is to promote development through the private sector.”
The bond is the IIC’s first placement aimed at diversifying its sources of funding as part of an international medium-term note program in the capital markets (Euro medium-term note – EMTN). Since May 2012, when the program was registered, the IIC has gone on the road to make a series of presentations to global investors in Asia, the Middle East, and Europe.
On the morning of Thursday, November 8, the initial target offering of US$300 million was quickly oversubscribed. Just a few hours after launching the bond, purchase orders had already exceeded US$440 million, which necessitated closing the bond offering. In response to the overwhelming demand, the IIC decided to increase the offering up to US$350 million, which was the amount ultimately subscribed.
The decision to increase the bond amount was also based on investor interest. In total, the IIC received purchase orders from 34 international investors, which is an unusually high number for a medium-term inaugural placement by an institution new to the global market. Various central banks were the dominant investor group, taking 42% of the bond, followed by international investment funds (31%) and global private banks (27%). The most significant investor demand originated in Europe (63%), followed by investors from the Middle East and North Africa (19%), the Americas (13%), and Asia (4%).
The placement received high praise in the international financial press. Euroweek, a publication focusing on the global capital markets, referred to it as a “flying start." “We remain committed to the bond markets and to the long-term success of our organization, in line with our institutional mandate,” said Ferreira.
The IIC is rated Aa2/AA/AAA.
About the IIC
The IIC, a member of the Inter-American Development Bank (IDB) Group, promotes private-sector development in Latin America and the Caribbean with a focus on small and medium-sized enterprises (SMEs). The IIC helps companies streamline management processes and provides them with financing in the form of equity investments, loans, and guarantees. In 2011, the IIC reached the symbolic one-billion-dollar mark in disbursements of own and third-party funds. Throughout its history, the IIC’s operations have benefited more than 1.6 million SMEs in Latin America and the Caribbean. For more information on the IIC’s activities, visit www.iic.org.
Contact: Orlando Ferreira
Telephone: +1 (202) 623-2924