Company Announcements

Issue of Debt

Source: RNS
RNS Number : 2922O
Inter-American Development Bank
28 May 2020
 

 

 

 

PRICING SUPPLEMENT

Inter-American Development Bank

Global Debt Program

Series No: 752

 

 

INR 633,900,000 3.87 percent Notes due May 25, 2023 (the "Notes")

Payable in Japanese Yen

 

 

Issue Price: 99.980 percent

 

 

 

 

 

No application has been made to list the Notes on any stock exchange.

 

 

 

 

 

Nomura International plc

 

 

 

 

 

 

 

The date of this Pricing Supplement is May 19, 2020

 

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 Regulation (EU) 2017/1129).  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.

MiFID II product governance / Retail investors, professional investors and ECPs target market - See "General Information-Additional Information regarding the Notes-Matters relating to MiFID II" below.

 

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.

1.

Series No.:

752

2.

Aggregate Principal Amount:

INR 633,900,000

3.

Issue Price:

INR 633,773,220, which is 99.980 percent of the Aggregate Principal Amount

The Issue Price will be payable in JPY in the amount of JPY 898,310,162 at the agreed rate of JPY 1.4174 per one INR.

4.

Issue Date:

May 28, 2020

5.

Form of Notes
(Condition 1(a)):

Bearer only.

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.

6.

Authorized Denomination(s)
(Condition 1(b)):

INR 100,000

7.

Specified Currency
(Condition 1(d)):

Indian Rupee ("INR") provided that all payments in respect of the Notes will be made in Japanese Yen ("JPY")

8.

Specified Principal Payment Currency
(Conditions 1(d) and 7(h)):

JPY

9.

Specified Interest Payment Currency
(Conditions 1(d) and 7(h)):

JPY

10.

Maturity Date
(Condition 6(a); Fixed Interest Rate):

May 25, 2023

The Maturity Date is subject to adjustment in accordance with the Following Business Day Convention with no adjustment to the amount of interest otherwise calculated.

11.

Interest Basis
(Condition 5):

Fixed Interest Rate (Condition 5(I))

12.

Interest Commencement Date
(Condition 5(III)):

Issue Date (May 28, 2020)

13.

Fixed Interest Rate (Condition 5(I)):

 

 

(a)  Interest Rate:

3.87 percent per annum

 

(b)  Fixed Rate Interest Payment Date(s):

 

Semi-annually on May 25 and November 25 in each year, commencing on November 25, 2020 and ending on the Maturity Date.

There will be a short first Interest Period from and including the Issue Date to but excluding November 25, 2020.

Each Fixed Rate Interest Payment Date is subject to adjustment in accordance with the Following Business Day Convention with no adjustment to the amount of interest otherwise calculated.

Calculation of Interest Amount

As soon as practicable and in accordance with the procedures specified herein, the Calculation Agent (as defined below) will determine the Reference Rate (as defined below) and calculate the amount of interest payable (the "Interest Amount") with respect to each Authorized Denomination for the relevant Interest Period.

The Interest Amount with respect to the Interest Period from and including the Interest Commencement Date to but excluding November 25, 2020, shall be a JPY amount calculated on the relevant Rate Fixing Date (as defined below) as follows:

INR 1,902.75 multiplied by the Reference Rate

(rounding down, if necessary, the entire resulting figure to the nearest lower whole JPY).

The Interest Amount with respect to each subsequent Interest Period shall be a JPY amount calculated on the relevant Rate Fixing Date (as defined below) as follows:

INR 1,935.00 multiplied by the Reference Rate

(rounding down, if necessary, the entire resulting figure to the nearest lower whole JPY).

If Price Source Disruption Event occurs, then the Reference Rate shall be determined in the following order.

(a)   The Reference Rate shall be calculated by dividing the USD/JPY_fx by the USD/INR_fx; provided that such number (expressed as the number of JPY per one INR) shall be rounded to four decimal places with 0.00005 being rounded upwards.

(b)   If the USD/JPY_fx is not available on the relevant Rate Fixing Date, the Calculation Agent will request five leading reference banks (selected by the Calculation Agent in its sole discretion) in the Tokyo interbank market for their mid market quotations of the USD/JPY spot exchange rate at approximately 3:30 p.m. Tokyo time on such date. The highest and the lowest of such quotations will be disregarded and the arithmetic mean of the remaining three quotations will be the USD/JPY_fx, provided that, if two or more such quotations are the highest quotations, then only one of such highest quotations shall be disregarded, and if two or more such quotations are the lowest quotations then only one of such lowest quotations shall be disregarded; provided that:

i.     if only four quotations are so provided, then the USD/JPY_fx shall be the arithmetic mean of such quotations without regard to the highest and lowest values quoted, provided that, if two or more such quotations are the highest quotations, then only one of such highest quotations shall be disregarded, and if two or more such quotations are the lowest quotations then only one of such lowest quotations shall be disregarded;

ii.    if fewer than four quotations but at least two quotations can be obtained, then the USD/JPY_fx shall be the arithmetic mean of the quotations actually obtained by the Calculation Agent;

iii.   if only one quotation is available, in that event, the Calculation Agent may determine that such quotation shall be the USD/JPY_fx; and

iv.   if no such quotation is available or if the Calculation Agent determines in its sole discretion that no suitable reference bank who is prepared to quote is available, the USD/JPY_fx shall be determined by the Calculation Agent acting in good faith and in a commercially reasonable manner, having taken into account relevant market practice.

(c)   If the USD/INR_fx is not available on the relevant Rate Fixing Date, the Calculation Agent will request five leading reference banks (selected by the Calculation Agent in its sole discretion) which regularly deal in the USD/INR exchange market for their market quotations of the USD/INR spot exchange rate on such date.  The highest and the lowest of such quotations will be disregarded and the arithmetic mean of the remaining three quotations will be the USD/INR_fx, provided that, if two or more such quotations are the highest quotations, then only one of such highest quotations shall be disregarded, and if two or more such quotations are the lowest quotations then only one of such lowest quotations shall be disregarded; provided that:

i.     if only four quotations are so provided, then the USD/INR_fx shall be the arithmetic mean of such quotations without regard to the highest and lowest values quoted, provided that, if two or more such quotations are the highest quotations, then only one of such highest quotations shall be disregarded, and if two or more such quotations are the lowest quotations then only one of such lowest quotations shall be disregarded;

ii.    if fewer than four quotations but at least two quotations can be obtained, then the USD/INR_fx shall be the arithmetic mean of the quotations actually obtained by the Calculation Agent;

iii.   if only one quotation is available, in that event, the Calculation Agent may determine that such quotation shall be the USD/INR_fx; and

iv.   if no such quotation is available or if the Calculation Agent determines in its sole discretion that no suitable reference bank who is prepared to quote is available, the USD/INR_fx shall be determined by the Calculation Agent acting in good faith and in a commercially reasonable manner, having taken into account relevant market practice.

(d)  Provided further that, if any Rate Fixing Date falls on an Unscheduled Holiday, the USD/INR_fx will be determined by the Calculation Agent on such Rate Fixing Date in its sole discretion, acting in good faith and in a commercially reasonable manner, having taken into account relevant market practice.

Where:

"Business Day" means a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in London, Mumbai, New York and Tokyo.

"Calculation Agent" means The Toronto-Dominion Bank.  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.

"Mumbai Business Day" means a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in Mumbai.

"Price Source Disruption Event" means the event that the FBIL Rate is not available on the relevant Rate Fixing Date.

"Rate Fixing Date" means the date that is ten (10) Business Days prior to the relevant Fixed Rate Interest Payment Date (including the Maturity Date), which shall not be subject to adjustment by any Business Day Convention. Provided that, even if there is an Unscheduled Holiday between the relevant Rate Fixing Date and relevant date of payment, such Rate Fixing Date shall not be subject to adjustment.

"FBIL Rate" means the spot JPY/INR foreign exchange rate (expressed as the number of INR per 100 JPY) which appears on Refinitiv Screen <INRREF=FBIL> Page (or such other page or services as may replace that page to be used for the purpose of obtaining the reference rate). If it becomes impossible to obtain the reference rate on the relevant Rate Fixing Date as mentioned aforesaid, the Calculation Agent shall be entitled to obtain such reference rate reported by Financial Benchmarks India Private Ltd ("FBIL") or its successor from any other screen or services that it deems appropriate in good faith and in a commercially reasonable manner.

"Reference Rate" means the product of 100 and the reciprocal number of the FBIL Rate on each Rate Fixing Date. The resulting figure (expressed as the number of JPY per one INR) shall be rounded to four decimal places with 0.00005 being rounded upwards.

"Unscheduled Holiday" means a day that is not a Mumbai Business Day and the market was not aware of such fact (by means of a public announcement or by reference to other publicly available information) until a time later than 9:00 a.m. local time in Mumbai, two Mumbai Business Days prior to the relevant Rate Fixing Date.

"USD/INR_fx" means the spot USD/INR foreign exchange rate (expressed as the number of INR per one USD) which appears on Refinitiv Screen <INRREF=FBIL> Page (or such other page or services as may replace that page to be used for the purpose of obtaining the reference rate) on the relevant Rate Fixing Date. If it becomes impossible to obtain the reference rate on the relevant Rate Fixing Date as mentioned aforesaid, the Calculation Agent shall be entitled to obtain such reference rate reported by FBIL or its successor from any other screen or services that it deems appropriate in good faith and in a commercially reasonable manner.

"USD/JPY_fx" means the USD/JPY exchange rate (expressed as the number of JPY per one USD) which appears on Bloomberg Screen <BFIX (USD/JPY Fixings)> Page (or such other page or services as may replace that page to be used for the purpose of obtaining the reference rate) under the "MID" column as of 3:30 p.m. Tokyo time on the relevant Rate Fixing Date.

 

(c)  Fixed Rate Day Count Fraction(s):

30/360

14.

Relevant Financial Center:

London, Mumbai, New York and Tokyo

15.

Relevant Business Days:

London, Mumbai, New York and Tokyo

16.

Redemption Amount (Condition 6(a)):

The Redemption Amount with respect to each Authorized Denomination will be a JPY amount calculated by the Calculation Agent on the Rate Fixing Date with respect to the Maturity Date as follows:

INR 100,000 multiplied by the Reference Rate

(rounding down, if necessary, the entire resulting figure to the nearest lower whole JPY).

17.

Issuer's Optional Redemption (Condition 6(e)):

No

18.

Redemption at the Option of the Noteholders (Condition 6(f)):

No

19.

Early Redemption Amount (including accrued interest, if applicable) (Condition 9):

 

In the event the Notes become due and payable as provided in Condition 9 (Default), the Early Redemption Amount with respect to each Authorized Denomination will be a JPY amount equal to the Redemption Amount that is determined in accordance with "16. Redemption Amount (Condition 6(a))" plus accrued and unpaid interest, if any, as determined in accordance with "13. Fixed Interest Rate (Condition 5(I))"; provided, that for purposes of such determination, the "Rate Fixing Date" shall be the date fixed by the Calculation Agent.

20.

Governing Law:

New York

21.

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.

 

 

(b)        United Kingdom:

The Dealer 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 such Notes in, from or otherwise involving the United Kingdom.

 

 

(c)        India:

The Dealer has acknowledged that, it will not offer or sell any Notes in India at any time.  The Notes have not been approved by the Securities and Exchange Board of India, Reserve Bank of India or any other regulatory authority of India, nor have the foregoing authorities approved this Pricing Supplement or confirmed the accuracy or determined the adequacy of the information contained in this Pricing Supplement. This Pricing Supplement has not been and will not be registered as a prospectus or a statement in lieu of prospectus with the Registrar of Companies in India.

 

(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).

 

 

(e)        General:

No action has been or will be taken by the Bank 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.

22.

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")."

23.

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.

Other Relevant Terms

1.

Listing:

None

2.

Details of Clearance System Approved by the Bank and the
Global Agent and Clearance and
Settlement Procedures:

Euroclear Bank SA/NV and/or Clearstream Banking S.A.

3.

Syndicated:

No

4.

Commissions and Concessions:

1.80 percent of the Aggregate Principal Amount

5.

Estimated Total Expenses:

None. The Dealer has agreed to pay for all material expenses related to the issuance of the Notes.

6.

Codes:

 

 

(a)  Common Code:

215289796

 

(b)  ISIN:

XS2152897968

7.

Identity of Dealer:

Nomura International plc

 

8.

Provisions for Bearer Notes:

 

 

(a)  Exchange Date:

Not earlier than July 7, 2020, which is the date that is 40 (forty) days after the Issue Date.

 

(b)  Permanent Global Note:

Yes

 

(c)  Definitive Bearer Notes:

No, except in the limited circumstances described under "Form of Notes" herein and in the Prospectus 

 

(d) Individual Definitive Registered Notes:


No

 

(e)  Registered Global Notes:

No

 

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:

"The net proceeds from the sale of the Notes will be included in the ordinary capital resources of the Bank and, will not be committed or earmarked for lending to, or financing of, any specific loans, projects or programs.  The Bank, in partnership with its member countries, works to reduce poverty and inequalities in Latin America and the Caribbean by promoting economic and social development in a sustainable, climate friendly way.

 

The Bank's strategic priorities include social inclusion and equality, productivity and innovation and economic integration along with three cross-cutting issues: gender equality and diversity, climate change and environmental sustainability, and institutional capacity and the rule of law.  Each strategic priority of the Bank aligns to at least one of the United Nations Sustainable Development Goals ("SDGs"), with all goals covered within the Bank's institutional strategy, which may be adapted from time to time should the United Nations SDGs definition evolve.

 

All projects undertaken by the Bank go through the Bank's rigorous sustainability framework. The framework tracks measurable results, adherence to lending targets and the effectiveness of its environmental and social safeguards. The Bank's administrative and operating expenses are currently covered entirely by the Bank's various sources of revenue, consisting primarily of net interest margin and investment income (as more fully described in the Bank's Information Statement)."

 

2.         Matters relating to MiFID II

The Bank does not fall under the scope of application of the MiFID II regime.  Consequently, the Bank does not qualify as an "investment firm", "manufacturer" or "distributor" for the purposes of MiFID II.

MiFID II product governance / Retail investors, professional investors and ECPs target market - Solely for the purposes of the manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties, professional clients and retail clients, each as defined in MiFID II; and (ii) all channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the manufacturer's target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer's target market assessment) and determining appropriate distribution channels.

 

For the purposes of this provision, the expression MiFID II means Directive 2014/65/EU, as amended.

3.         Additional Investment Considerations:

 

            There are significant risks associated with the Notes, including but not limited to exchange rate risk, price risk and liquidity risk.  Investors should consult their own financial, legal, accounting and tax 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. 

           

            The methodologies for determining the Japanese Yen-Indian Rupee foreign exchange rate may result in a Redemption Amount or the Early Redemption Amount (if applicable) of the Notes, or an interest payment on the Notes, being significantly less than anticipated.

 

            The Bank may hedge its obligations under the Notes by entering into a swap transaction with the Dealer, one of its affiliates or other parties as swap counterparty. Assuming no change in market conditions or any other relevant factors, the price, if any, at which the Dealer or another purchaser might be willing to purchase Notes in a secondary market transaction is expected to be lower, and could be substantially lower, than the original issue price of the Notes. This is due to a number of factors, including that (i) the potential profit to the secondary market purchaser of the Notes may be incorporated into any offered price and (ii) the cost of funding used to value the Notes in the secondary market is expected to be higher than our actual cost of funding incurred in connection with the issuance of the Notes. In addition, the original issue price of the Notes included, and secondary market prices are likely to exclude, the projected profit that our swap counterparty or its affiliates may realize in connection with this swap. Further, as a result of dealer discounts, mark-ups or other transaction costs, any of which may be significant, the original issue price may differ from values determined by pricing models used by our swap counterparty or other potential purchasers of the Notes in secondary market transactions.

 

            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.

 

 INTER-AMERICAN DEVELOPMENT BANK

 

 

 

 

 

 


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