The Inter-American Development Bank has issued its first inflation-linked bond denominated in Brazilian currency. The issue of 200 million reais (approximately $73,000,000) matures on Dec. 8, 2009. The issue was priced on Dec. 7 at 100 percent and will pay a coupon of 6.26 percent. The principal will be adjusted to inflation.
ABN AMRO is the lead manager of the issue, which is targeted to international institutional investors and is subject to selling restrictions in Brazil.
The bond is the fourth IDB issue in a Latin American currency. The IDB earlier this year issued a bond in Brazilian reais as well as issues in Colombian and Mexican national currencies.
The latest issue was well received by the market, satisfying global demand for Brazilian reais assets.
The proceeds were swapped into U.S. dollars by the IDB and will be used to help finance the Banks lending program for the economic and social development of Latin America and the Caribbean. The IDBs borrowing program in 2004 is expected to be about $5 billion.
This year the Bank for the first time issued bonds in Latin American currencies in order to take advantage of favorable market opportunities and a growing maturity and depth in regional financial systems.