On June 22, 2005, the Inter-American Development Bank was distinguished as the “2004 Best Supranational Borrower” by Euromoney magazine for its pioneering role in issuing bonds denominated in Latin American currencies.
Euromoney said the IDB's bond issues during 2004 in Brazilian reais, as well as Colombian and Mexican pesos helped “open new bond markets in Latin America.”
The magazine said the IDB Latin currency bond issues, which are only a small percentage of total IDB debt, helped “develop capital markets in its own region of Latin America.” Euromoney said that the operations in Latin American currencies diversified the IDB's funding portfolio and produced “excellent funding results once the bond is swapped into dollars.”
In addition to the Latin American currencies mentioned above, in 2004, the IDB issued bonds denominated in the following currencies: Australian, Canadian, Hong Kong, New Zealand, and U.S. dollars, and South African rands.
Euromoney said the IDB “blazed a trail” in international bond markets through years of patient negotiations with government authorities in Latin American to provide a regulatory and legal framework for the local currency issues to take place.
The IDB, which enjoys a triple-A rating, issued its first bond in a Latin American currency in April of 2004 in Mexican pesos for the equivalent of $269 million. Also later on in the year, the IDB issued the first Brazilian real eurobond (equivalent of $189 million) with a coupon linked to inflation index IGPM. And by the end of 2004, the IDB issued the first Colombian peso (equivalent of $44 million) in eurobond format.
“We are delighted with the recognition by Euromoney about the IDB breaking new grounds in issuing its first bonds in Latin American currencies,” commented John Hauge, manager of the Bank's Finance Department. “Although these issues were limited in amount, they served multiple goals. First of all, these transactions were cost effective and provided attractive rates and greater diversifications for our borrowing program. Secondly, we broke the ice and set a precedent for other borrowers, thereby helping to strengthen Latin America's growing financial markets. Finally, we advanced the concept that Latin America can take out a greater percentage of its debt in its own currency as opposed to foreign currencies, thereby reducing the risk of currency mismatches and financial volatility.”
The Inter-American Development Bank issues bonds in various maturities, volumes and currencies to help fund its lending program – which during 2004 totaled $6 billion – for the economic and social development of Latin America and the Caribbean.
The Bank issued bonds totaling $4.7 billion during 2004 in nine different currencies with an average maturity of 5.5 years. The IDB is expected to borrow around $3 billion during 2005.
The Inter-American Development Bank has won numerous international awards. Euromoney designated the IDB “Best Supranational Borrower” for 2000, and the IDB received that same distinction in 1999 from International Finance Review.