IDB to Visit Japan with BRL

The IDB is preparing a BRL-denominated bond issuance in the Japanese “uridashi” retail market, it says. The 4-year bonds have an indicative coupon of 8.1%, plus or minus 75bp, according to an IDB spokeswoman, and will be offered to Japanese investors July 6-July 12. She declines to indicate the amount the bank plans to sell, as this will be defined closer to pricing. “The Brazilian real is a currency that is currently much in demand by the Japanese investor base,” Soren Elbech, IDB Treasurer tells Latin Finance. Proceeds from the bonds, which are payable in USD, are marked for poverty reduction goals that support economic and social developments in LatAm and the Caribbean. The so-called Poverty Reduction bonds are the first “theme bond” issuance from the IDB, a concept used to encourage investors by reminding them of use of proceeds. “The investor base in Japan is accustomed to buying themes, and the IDB is highlighting that we make an effort to fund projects that have fighting poverty as a goal,” Elbech says. Daiwa is managing the sale. CAF sold $74m in 3.11% 2014 bonds yielding 3.12% in Japan in May. The issuer called the trade LatAm’s first ever retail-only placement in Japan. Japanese banks have been pitching both retail and institutional issuance in Japan to LatAm clients. In addition to CAF, Mexico and Colombia tapped Japanese investors last year.