Source - RNS
RNS Number : 4836K
Inter-American Development Bank
21 September 2016
 

 

 

 

PRICING SUPPLEMENT

Inter-American Development Bank

Global Debt Program

Series No: 577

 

 

BRL 19,500,000 7.85 percent Notes due September 24, 2019 (the "Notes")

 

payable in Japanese Yen

 

 

Issue Price: 100.00 percent

 

 

 

 

 

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

 

 

 

 

 

J.P. Morgan Securities plc

 

 

 

 

 

 

The date of this Pricing Supplement is September 14, 2016

 

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.

1.

Series No.:

577

2.

Aggregate Principal Amount:

BRL 19,500,000

3.

Issue Price:

BRL 19,500,000, which is 100.00 percent of the Aggregate Principal Amount

The Issue Price will be payable in Japanese Yen ("JPY"), being the lawful currency of Japan, in the amount of JPY 604,500,000 at the agreed rate of JPY 31.00 per one BRL.

4.

Issue Date:

September 20, 2016

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"), with all Coupons, if any, in respect of interest attached, 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)):


BRL 10,000

7.

Specified Currency
(Condition 1(d)):


Brazilian Real ("BRL"), being the lawful currency of the Federative Republic of Brazil; provided that all payments in respect of the Notes will be made in 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):


September 24, 2019

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.

11.

Interest Basis
(Condition 5):


Fixed Interest Rate (Condition 5(I))

12.

Interest Commencement Date
(Condition 5(III)):


September 21, 2016

13.

Fixed Interest Rate (Condition 5(I)):

 

 

 

(a)  Interest Rate:

7.85 percent per annum

 

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

 

Semi-annually in arrears on March 24 and September 24 in each year, commencing on March 24, 2017 and ending on the Maturity Date.

There will be long first Interest Period from and including the Interest Commencement Date to but excluding March 24, 2017.

Each Fixed Rate Interest Payment Date is subject to adjustment in accordance with the Modified 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 BRL 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 March 24, 2017, shall be a JPY amount calculated on the relevant FX Fixing Date (as defined below) as follows:

BRL 399.04 multiplied by the Reference BRL Rate

(rounding, if necessary, the entire resulting figure to the nearest whole JPY, with JPY 0.5 being rounded upwards).

The Interest Amount with respect to each subsequent Interest Period shall be a JPY amount calculated on the relevant FX Fixing Date as follows:

BRL 392.50 multiplied by the Reference BRL Rate

(rounding, if necessary, the entire resulting figure to the nearest whole JPY, with JPY 0.5 being rounded upwards).

Where:

"FX Fixing Date" means the date that is five (5) Relevant Business Days prior to the applicable Fixed Rate Interest Payment Date or the Maturity Date.

"PTAX Rate" means, with respect to an FX Fixing Date, the BRL/JPY foreign exchange rate (expressed as the number of BRL per one JPY) as published on Bloomberg Page <BZFXJPY><INDEX> or on any successor page or on the web site of the Central Bank of Brazil (www.bcb.gov.br/?english) at approximately 1:15 p.m. São Paulo time on such FX Fixing Date; provided, that the PTAX Rate found on the web site of the Central Bank of Brazil shall prevail in case of conflict with the PTAX Rate appearing on Bloomberg Page <BZFXJPY><INDEX>.

"Reference BRL Rate" means, with respect to an FX Fixing Date, the reciprocal number (expressed as the number of JPY per one BRL) of the ask side of the PTAX Rate (as defined above) (such reciprocal number being rounded to the nearest two decimal places with 0.005 being rounded upwards). 

If the PTAX Rate is not available on the applicable FX Fixing Date, then the Calculation Agent shall determine the Reference BRL Rate as a cross currency exchange rate by dividing the USD/JPY FX Rate by the USD/BRL FX Rate (each as defined below) (such rate being rounded to the nearest two decimal places with 0.005 being rounded upwards); provided, that if the USD/BRL FX Rate and/or the USD/JPY FX Rate is/are unavailable on the relevant FX Fixing Date, then the Calculation Agent will determine the Reference BRL Rate on such FX Fixing Date in its sole discretion, acting in good faith and in a commercially reasonable manner.

The parties acknowledge that the USD/BRL FX Rate may not be available on the same date on which the PTAX Rate is first unavailable and, as a result, a determination by the Calculation Agent of the Reference BRL Rate will, in such cases, be the only operable fallback.

"USD/BRL FX Rate" means the EMTA BRL Industry Survey rate, which is the USD/BRL specified foreign exchange rate (expressed as the number of BRL per one USD), as published on EMTA's website (www.emta.org) at or around 3:45 p.m. São Paulo time on the relevant FX Fixing Date.  The EMTA BRL Industry Survey Rate is calculated by EMTA (or a service provider EMTA may select in its sole discretion) pursuant to the EMTA BRL Industry Survey Methodology (which means a methodology, dated as of March 1, 2004, as amended from time to time, for a centralized industry-wide survey of financial institutions in Brazil that are active participants in the BRL/USD spot rate markets for the purpose of determining the EMTA BRL Industry Survey Rate).

"USD/JPY FX Rate" means the USD/JPY bid exchange rate (expressed as the number of JPY per one USD) as published on the Reuters Screen Page "JPNW", or its successor page for the purpose of displaying such rate, as of 4:00 p.m. New York time on the relevant FX Fixing Date.

 

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

30/360

14.

Relevant Financial Center:

Tokyo

15.

Relevant Business Days:

London, New York City, São Paulo 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 FX Fixing Date with respect to the Maturity Date as follows:

BRL 10,000 multiplied by the Reference BRL Rate

(rounding, if necessary, the entire resulting figure to the nearest whole JPY, with JPY 0.5 being rounded upwards).

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 of any Notes becoming due and payable prior to the Maturity Date as provided in Condition 9, 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 determining such JPY amount, the FX Fixing 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.

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)        Federative Republic of Brazil:

The Dealer has represented and agreed that it has not offered or sold and will not offer or sell any Notes in Brazil. The Notes have not been and will not be registered with the Brazilian Securities and Exchange Commission (Commissão de Valores Mobililiarios, the "CVM").

 

 

(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.

 

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, Luxembourg

3.

Syndicated:

No

4.

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.

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:

148355550

 

(b)  ISIN:

XS1483555501

7.

Identity of Dealer:

J.P. Morgan Securities plc

 

8.

Identity of Calculation Agent:

JPMorgan Chase Bank, N.A.

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 commercially reasonable manner in accordance with the calculation agent agreement between the Bank and the Calculation Agent.

9.

Provisions for Bearer Notes:

 

 

(a)  Exchange Date:

Not earlier than October 31, 2016, which is the date that is 41 (forty-one) 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

10.

Additional Risk Factors:

As set forth in the Additional Investment Considerations

 

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 IADB in a separate sub-account supporting Eligible Projects. These proceeds will be invested in accordance with the IADB's conservative liquidity investment guidelines until used to support the IADB'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 IADB's policies.

 

Although Eligible Projects funded by the net proceeds shall be reported on the IADB website on an annual basis, funds shall be reduced from the account on a semi-annual basis by amounts matching the disbursements made during such semi-annual period in respect of Eligible Projects.

 

"Eligible Projects" means all projects funded, in whole or in part, by IADB 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 to 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 IADB during the term of the Notes."

 

2.         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-Brazilian Real foreign exchange rate may result in a Redemption Amount 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 or one of its affiliates 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

By:                                                                              

Name:   Gustavo Alberto De Rosa

Title:      Chief Financial Officer and

             General Manager, Finance Department

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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