PRICING SUPPLEMENT
Inter-American Development Bank
Global Debt Program
Series No.: 717
IDR 15,500,000,000 Zero Coupon Notes due August 9, 2022 (the "Notes") payable in Japanese Yen
Issue Price: 86.30 percent
No application has been made to list the Notes on any stock exchange.
HSBC
The date of this Pricing Supplement is August 5, 2019
Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Prospectus dated January 8, 2001 (the "Prospectus") (which for the avoidance of doubt does not constitute a prospectus for the purposes of Part VI of the United Kingdom Financial Services and Markets Act 2000 or a base prospectus for the purposes of Directive 2003/71/EC of the European Parliament and of the Council). This Pricing Supplement must be read in conjunction with the Prospectus. This document is issued to give details of an issue by the Inter-American Development Bank (the "Bank") under its Global Debt Program and to provide information supplemental to the Prospectus. Complete information in respect of the Bank and this offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Prospectus.
Terms and Conditions
The following items under this heading "Terms and Conditions" are the particular terms which relate to the issue the subject of this Pricing Supplement. These are the only terms which form part of the form of Notes for such issue.
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1. |
Series No.: |
717 |
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2. |
Aggregate Principal Amount: |
IDR 15,500,000,000 |
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3. |
Issue Price: |
IDR 13,376,500,000 which is 86.30 percent of the Aggregate Principal Amount. The Issue Price will be payable in JPY in the amount of JPY 102,651,261 at the agreed rate of JPY 0.007674 per one IDR.
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4. |
Issue Date: |
August 8, 2019 |
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5. |
Form of Notes |
The Notes will initially be represented by a temporary global note in bearer form (the "Temporary Bearer Global Note"). Interests in the Temporary Bearer Global Note will, not earlier than the Exchange Date, be exchangeable for interests in a permanent global note in bearer form (the "Permanent Bearer Global Note"). Interests in the Permanent Bearer Global Note will be exchangeable for definitive Notes in bearer form ("Definitive Bearer Notes"), in the following circumstances: (i) if the Permanent Bearer Global Note is held on behalf of a clearing system and such clearing system is closed for business for a continuous period of fourteen (14) days (other than by reason of holidays, statutory or otherwise) or announces its intention to permanently cease business or does in fact do so, by any such holder giving written notice to the Global Agent; and (ii) at the option of any such holder upon not less than sixty (60) days' written notice to the Bank and the Global Agent from Euroclear and Clearstream, Luxembourg on behalf of such holder; provided, that no such exchanges will be made by the Global Agent, and no Noteholder may require such an exchange, during a period of fifteen (15) days ending on the due date for any payment of principal on the Notes. |
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6. |
Authorized Denomination(s) |
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7. |
Specified Currency |
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8. |
Specified Principal Payment Currency |
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9. |
Specified Interest Payment Currency |
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10. |
Maturity Date |
August 9, 2022 The Maturity Date is subject to adjustment in accordance with the Modified Following Business Day Convention with no adjustment to the amount of interest otherwise calculated. |
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11. |
Interest Basis |
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12. |
Zero Coupon (Conditions 5(IV) and 6(c)): |
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(a) Amortization Yield: |
5.02918688514 percent per annum |
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(b) Reference Price: |
Issue Price |
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(c) Basis: |
Compounded annually |
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(d) Fixed Rate Day Count Fraction(s) if not 30/360 basis: |
30/360 |
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13. |
Redemption Amount (Condition 6(a)):: |
The Redemption Amount with respect to each minimum Authorized Denomination will be a JPY amount calculated by the Calculation Agent as of the IDR Valuation Date as follows:
minimum Authorized Denomination
multiplied by
the IDR Rate
(and rounding, if necessary, the entire resulting figure to the nearest whole JPY, with JPY 0.5 being rounded upwards). The "IDR Rate" means the IDR/JPY exchange rate, expressed as the amount of JPY per one IDR, which is calculated by the Calculation Agent as follows: USD/JPY Reference Rate divided by USD/IDR Reference Rate (and rounding, if necessary, the entire resulting figure to the nearest 5 decimal places, with JPY 0.000005 being rounded upwards). Where: The "USD/JPY Reference Rate" means the mid rate of USD/JPY, expressed as the number of JPY per one USD, published on the Reuters Screen "JPNU" page (or its successor page for the purpose of displaying such rate) as of 12:00 p.m., Tokyo time on the relevant IDR Valuation Date, as determined by the Calculation Agent in its sole discretion acting in good faith and in a commercially reasonable manner. In the event that no such quotation appears on the Reuters Screen "JPNU" page (or its successor page for the purpose of displaying such rate), the USD/JPY Reference Rate shall be determined by the Calculation Agent by requesting quotations for mid rate of USD/JPY foreign exchange rate at or about 12:00 p.m. Tokyo time on the first (1st) IDR Business Day following the relevant IDR Valuation Date from Reference Dealers. If five or four quotations are provided as requested, the USD/JPY Reference Rate will be the arithmetic mean of the remaining three or two such quotations, as the case may be, for such rate provided by the Reference Dealers, after disregarding the highest such quotation and the lowest such quotation (provided that, if two or more such quotations are the highest such quotations, then only one of such quotations shall be disregarded, and if two or more such quotations are the lowest quotations, then only one of such lowest quotations will be disregarded). If only three or two such quotations are provided as requested, the USD/JPY Reference Rate shall be determined as described above except that the highest and lowest quotations will not be disregarded. If none or only one of the Reference Dealers provides such quotation, the USD/JPY Reference Rate will be determined by the Calculation Agent in its sole discretion, acting in good faith and in a commercially reasonable manner. The "USD/IDR Reference Rate" means the spot rate of USD/IDR at approximately 10:00 a.m. Jakarta time expressed as the number of IDR per one USD and published on the Reuters Screen "JISDOR" page (or its successor page for the purpose of displaying such rate) on the relevant IDR Valuation Date, as determined by the Calculation Agent in its sole discretion, acting in good faith and in a commercially reasonable manner. In the event that no such quotation appears on the Reuters Screen "JISDOR" page (or its successor page for the purpose of displaying such rate), the USD/IDR Reference Rate shall be determined by the Calculation Agent by requesting quotations for mid rate of USD/IDR foreign exchange rate at or about 10:00 a.m. Jakarta time on the first (1st) IDR Business Day following the relevant IDR Valuation Date from the Reference Dealers. If five or four quotations are provided as requested, the USD/IDR Reference Rate will be the arithmetic mean (rounded to the nearest whole IDR, 0.5 being rounded upwards) of the remaining three or two such quotations, as the case may be, for such rate provided by the Reference Dealers, after disregarding the highest such quotation and the lowest such quotation (provided that, if two or more such quotations are the highest such quotations, then only one of such quotations shall be disregarded, and if two or more such quotations are the lowest quotations, then only one of such lowest quotations will be disregarded). If only three or two such quotations are provided as requested, the USD/IDR Reference Rate shall be determined as described above except that the highest and lowest quotations will not be disregarded. If none or only one of the Reference Dealers provides such quotation, the USD/IDR Reference Rate will be determined by the Calculation Agent in its sole discretion, acting in good faith and in a commercially reasonable manner. |
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The "IDR Valuation Date" means the date that is five (5) Relevant Business Days prior to the Maturity Date. The IDR Valuation Date shall be subject to adjustment as follows: if the scheduled date of the IDR Valuation Date is not a Relevant Business Day, then the IDR Valuation Date will be the first preceding day that is a Relevant Business Day. "IDR Business Day" means a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in Tokyo, New York City and Jakarta. "Reference Dealers" means five banks active in the USD/IDR or USD/JPY currency and foreign exchange market, as applicable, as selected by the Calculation Agent in its sole discretion, acting in good faith and in a commercially reasonable manner. |
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(f) Calculation Agent: |
See "8. Identity of Calculation Agent" under "Other Relevant Terms" |
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Relevant Financial Center: |
Tokyo, London, New York City and Jakarta |
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15. |
Relevant Business Day: |
Tokyo, London, New York City and Jakarta |
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16. |
Issuer's Optional Redemption (Condition 6(e)): |
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17. |
Redemption at the Option of the Noteholders (Condition 6(f)): |
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18. |
Early Redemption Amount (including accrued interest, if applicable) (Condition 9): |
In the event of any Notes becoming due and payable prior to the Maturity Date in accordance with Condition 9, (but, for the avoidance of doubt, not Condition 6(e)), the Early Redemption Amount shall be a JPY amount equal to the Amortized Face Amount of such Note (calculated in accordance with Condition 6(c)); provided that, for the purpose of determining such JPY amount, IDR Valuation Date shall mean the date that is five (5) Relevant Business Days prior to the date on which the Early Redemption Amount shall be due and payable as provided in Condition 9 (and rounding, if necessary, the entire resulting figure to the nearest whole JPY, with JPY 0.5 being rounded upwards). |
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19. |
Governing Law: |
New York |
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20. |
Selling Restrictions: (a) United States: |
Under the provisions of Section 11(a) of the Inter-American Development Bank Act, the Notes are exempted securities within the meaning of Section 3(a)(2) of the U.S. Securities Act of 1933, as amended, and Section 3(a)(12) of the U.S. Securities Exchange Act of 1934, as amended. Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to U.S. persons, except in certain circumstances permitted by U.S. tax regulations. |
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(b) United Kingdom: |
The Dealer represents and agrees that it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom. |
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(c) Indonesia: |
The Notes are not and will not be registered with the Financial Services Authority previously known as the Capital Market and Financial Institutions Supervisory Agency (the "OJK") in Indonesia. As such, the Notes (including the distribution and dissemination of the Pricing Supplement, other written materials either through advertisements or other media authorized) are not authorized by the OJK for their sale by public offering in the Indonesian territory and/or to Indonesian entities or residents in the Indonesian territory in circumstances which constitute a public offering of securities under the Indonesian Law No. 8/1995 regarding Capital Markets. Likewise, the Notes and the Pricing Supplement have not been reviewed, registered or authorized by the Central Bank (Bank Indonesia) for their distribution through banking institutions in Indonesia.
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(d) Japan: |
The Dealer represents that it is purchasing the Notes as principal and has agreed that in connection with the initial offering of Notes, it has not offered or sold and will not directly or indirectly offer or sell any Notes in Japan or to, or for the benefit of, any resident of Japan (including any Japanese corporation or any other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (except in compliance with the Financial Instruments and Exchange Law of Japan (Law no. 25 of 1948, as amended) and all other applicable laws and regulations of Japan), and furthermore undertakes that any securities dealer to whom it sells any Notes will agree that it is purchasing the Notes as principal and that it will not offer or sell any Notes, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (except as aforesaid).
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(e) General: |
No action has been or will be taken by the Issuer that would permit a public offering of the Notes, or possession or distribution of any offering material relating to the Notes in any jurisdiction where action for that purpose is required. Accordingly, the Dealer agrees that it will observe all applicable provisions of law in each jurisdiction in or from which it may offer or sell Notes or distribute any offering material. |
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20. |
Amendment to Condition 7(a)(i): |
Condition 7(a)(i) is hereby amended by deleting the first sentence thereof and replacing it with the following: "Payments of principal and interest in respect of Registered Notes shall be made to the person shown on the Register at the close of business on the business day before the due date for payment thereof (the "Record Date")". |
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21. |
Amendment to Condition 7(h): |
The following shall apply to Notes any payments in respect of which are payable in a Specified Currency other than United States Dollars: Condition 7(h) is hereby amended by deleting the words "the noon buying rate in U.S. dollars in the City of New York for cable transfers for such Specified Currency as published by the Federal Reserve Bank of New York on the second Business Day prior to such payment or, if such rate is not available on such second Business Day, on the basis of the rate most recently available prior to such second Business Day" and replacing them with the words "a U.S. dollar/Specified Currency exchange rate determined by the Calculation Agent as of the second Business Day prior to such payment, or, if the Calculation Agent determines that no such exchange rate is available as of such second Business Day, on the basis of the exchange rate most recently available prior to such second Business Day. In making such determinations, the Calculation Agent shall act in good faith and in a commercially reasonable manner having taken into account all available information that it shall deem relevant".
If applicable and so appointed, and unless otherwise defined herein, the "Calculation Agent" referred to in amended Condition 7(h) shall be the Global Agent under the Bank's Global Debt Program - namely, Citibank, N.A., London Branch, or its duly authorized successor.
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Other Relevant Terms |
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Listing: |
None |
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2. |
Details of Clearance System Approved by the Bank and the |
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Syndicated: |
No |
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Commissions and Concessions: |
No commissions or concessions are payable in respect of the Notes. An affiliate of the Dealer has arranged a swap with the Bank in connection with this transaction and will receive amounts thereunder that may comprise compensation. |
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Estimated Total Expenses: |
None. The Dealer has agreed to pay for all material expenses related to the issuance of the Notes. |
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6. |
Codes: |
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(a) Common Code: |
202369847 |
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(b) ISIN: |
XS2023698470 |
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7. |
Identity of Dealer: |
HSBC Bank plc |
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8. |
Identity of Calculation Agent: |
HSBC Bank plc |
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All determinations of the Calculation Agent shall (in the absence of manifest error) be final and binding on all parties (including, but not limited to, the Bank and the Noteholders) and shall be made in its sole discretion in good faith and in a commercially reasonable manner in accordance with a calculation agent agreement between the Bank and the Calculation Agent.
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9. |
Provisions for Bearer Notes: |
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(a) Exchange Date: |
Not earlier than September 17, 2019, which is the date that is 40 (forty) days after the Issue Date.
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(b) Permanent Global Note: |
Yes |
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(c) Definitive Bearer Notes: |
No, except in the limited circumstances described under "Form of Notes" herein and in the Prospectus |
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(d) Individual Definitive Registered Notes: |
No |
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(e) Registered Global Notes: |
No |
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10. |
Additional Risk Factors: |
As set forth in the Additional Investment Considerations |
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General Information
Additional Information regarding the Notes
1. The language set out under the heading "Use of Proceeds" in the Prospectus shall be deleted in its entirety and replaced by the following:
"An amount equal to the net proceeds of the issue of the Notes (which proceeds may be converted into other currencies) shall be recorded by the Bank in a separate sub-account supporting Eligible Projects. These proceeds will be invested in accordance with the Bank's conservative liquidity investment guidelines until used to support the Bank's financing of Eligible Projects. So long as the Notes are outstanding and the account has a positive balance, the Bank shall direct an amount equal to such net proceeds to its lending projects within the fields of Education, Youth, and Employment, subject to and in accordance with the Bank's policies. The Bank shall allocate amounts from the sub-account to support the financing of Eligible Projects on a semi-annual basis.
"Eligible Projects" means all projects funded, in whole or in part, by the Bank that promote early childhood care and education, through formal primary and secondary education, or facilitate labor market placement by improving the transition from school to work through vocational training. Eligible Projects may include projects in Latin America and the Caribbean that target (a) early childhood development, effective teaching and learning among children and youth ("Education Projects"), (b) early childhood care and youth-at-risk programs ("Youth Projects") or (c) labor intermediation systems, job opportunities and workforce skills ("Employment Projects").
Examples of Education Projects include, without limitation:
• Early childhood development programs
• Primary education programs, which includes teacher training, bilingual education, literacy, math and science education and school infrastructure
• Secondary education programs, which includes programs directed to improving retention and graduation, developing teaching and learning methods and providing assistance to disadvantaged children
• Compensatory education programs
• Teacher education and effectiveness programs
• E-education programs
Examples of Youth Projects include, without limitation:
• Support for parents and caregivers to improve quality of child care
• Youth-At-Risk programs which support interventions, policy design, and/or impact evaluations to benefit at-risk youth
Examples of Employment Projects include, without limitation:
• School-to-Work transition programs
• Vocational and technical education programs
• Human resources and workforce development programs
• Labor intermediation systems
• Vocational and Workforce training programs, directed at improving social and labor acclimation for youth, unemployed adults and active workers
The above examples of Education Projects, Youth Projects and Employment Projects are for illustrative purposes only and no assurance can be provided that disbursements for projects with these specific characteristics will be made by the Bank during the term of the Notes."
2. Additional Investment Considerations:
The Notes offered by this Pricing Supplement are complex financial instruments and may not be suitable for certain investors. Investors intending to purchase the Notes should consult with their tax and financial advisors to ensure that the intended purchase meets the investment objective before making such purchase.
There are various risks associated with the Notes including, but not limited to, exchange rate risk, price risk and liquidity risk. Investors should consult with their own financial, legal and accounting advisors about the risks associated with an investment in these Notes, the appropriate tools to analyze that investment, and the suitability of the investment in each investor's particular circumstances. Holders of the Notes should also consult with their professional tax advisors regarding tax laws applicable to them.
Payment of the Redemption Amount will be based on the IDR Rate, which is a measure of the rate of exchange between the Indonesian Rupiah and the JPY. Currency exchange rates are volatile and will affect the holder's return. In addition, the government of Indonesia can from time to time intervene in the foreign exchange market. These interventions or other governmental actions could adversely affect the value of the Notes, as well as the yield (in JPY terms) on the Notes and the amount payable at maturity or upon acceleration. Even in the absence of governmental action directly affecting currency exchange rates, political or economic developments in Indonesia or elsewhere could lead to significant and sudden changes in the exchange rate between the Indonesian Rupiah and the JPY.
The Indonesian Rupiah is an emerging market currency. Emerging market currencies may be subject to particularly substantial volatility, as well as to government actions including currency controls, devaluations and other matters which could materially and adversely affect the value of the Notes.
The methodologies for determining the IDR Rate may result in a Redemption Amount (or Early Redemption Amount, as the case may be) of the Notes being significantly less than anticipated or less than what an alternative methodology for determining the IDR-JPY exchange rate would yield.
INTER-AMERICAN DEVELOPMENT BANK
By:
Name: Gustavo Alberto De Rosa
Title: Chief Financial Officer and
General Manager, Finance Department
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