IDB Invest May Sell $2 Billion in ESG Bonds as Demand Jumps

(Bloomberg) -- IDB Invest, the private-sector arm of the Inter-American Development Bank, is planning to issue as much as $2 billion in sustainable bonds this year, taking advantage of strong demand for such debt from developing countries.

The Washington-based bank is forecasting to sell between $1.5 billion and $2 billion in environmental, social and governance debt this year, compared with a record $1.6 billion in 2021, Chief Investment Officer Gema Sacristan said in a telephone interview Wednesday. Last year, it issued one sustainability bond, two social bonds, two green bonds and Latin America’s first blue bond for water and ocean conservation, she said.

IDB Invest last tapped the debt market on Wednesday, when it sold A$300 million ($217 million) of green notes due 2027, according to TD Securities, one of the underwriters. Deutsche Bank AG led the sale of the bonds, which priced with a 2.3% yield, TD said. The proceeds will be used toward sustainable infrastructure projects in Latin America, said Sacristan. 

The bank made its debut in the Australian market in June in part to take advantage of the strong demand for ESG debt from Asian investors. In November, it issued Latin America’s first blue bond in that market. The Asia region is generating demand for Latin American bonds, which helps IDB Invest expand its scope of investors, Sacristan said.

“We have a clear strategy to optimize our funding by diversifying across currencies and regions,” she added.

The bank may also launch a pound-denominated sustainability bond this month, Bloomberg reported. 

IDB Invest has a mandate as well to contribute to the development of local capital markets. It’s key for countries in the region “to send a signal to the market that they’re working on their international commitments on climate change,” Sacristan said. “And you’re creating demand as well.”

Sacristan said IDB Invest is currently working with two countries in the region to advise them on the issuance of so-called thematic bonds, but declined to name them.

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