WED 23 JUNE, 2021-theGBJournal-The International Finance Corporation (IFC) priced its inaugural Secured Overnight Financing Rate (SOFR) bond, a 2-year USD-denominated benchmark raising $1 billion for private sector development and job creation in emerging markets.
“This milestone transaction marks IFC’s first ever SOFR-linked benchmark issuance and represents its commitment to growing the floating rate market away from LIBOR and towards alternative overnight risk-free rates,” said Tom Ceusters, IFC Director, Treasury Market Operations.
“IFC is monitoring market developments and working toward a smooth transition to a successor benchmark rate to augment our funding program which supports our institutional mandate of unlocking private investment, creating markets and opportunities where they’re needed most.”
The transaction, anchored by orders primarily from the Americas and Europe, priced at par, with a quarterly floating coupon of SOFR + 9 basis points. This will be calculated using a five-day observation lag on compounded daily SOFR, with no lockout. The note settles on June 30, 2021 and matures on June 30, 2023.
Joint lead managers for this transaction are BMO Capital Markets, TD Global Finance and Wells Fargo Securities.
“We were delighted to be involved in the inaugural SOFR benchmark for IFC. The choice of a 2y maturity worked well given the limited supply in this part of the curve this year. The transaction attracted high quality investor demand, particularly from the US, as well as achieved a very competitive cost of funding for IFC. This transaction is a milestone for the IFC balance sheet transition to SOFR – congratulations to the IFC team!” said Laura O’Connor, Managing Director, Fixed Income Origination & Syndication, TD Securities.
“We are honored to be part of International Finance Corporation’s inaugural SOFR-linked benchmark FRN. With this transaction, the IFC takes another great step towards a full Libor-SOFR transition. The issue achieved the tightest spread of any SOFR transaction in the Supranational sector, and received phenomenal support from public sector entities. Congratulations to the IFC funding team,” said Carlos Perezgrovas, Head SSA Origination, Wells Fargo Securities, LLC.
“IFC’s leadership in the development of SOFR cash and derivatives markets culminated in this inaugural bond offering. The transaction reached unique investors across the globe in search of SOFR assets, anchored by demand from US state funds and money managers. Congratulations to IFC on its latest accomplishment surrounding benchmark reform, BMO was thrilled to be a partner,” said Sean Hayes, Managing Director, Head US Syndicate & Credit Sales.
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