IFC released its new Social Bond Impact Report, showing cumulative volume raised from the program more than doubled in 2020, bringing the total to over $3 billion since the program's founding.
IFC issued 11 social bonds in 2020, totaling $1.6 billion through four currencies — a record volume since the program's launch in March 2017 — supporting low-income communities and businesses at a time of global challenge from the COVID-19 pandemic.
As of the end of 2020, IFC had issued a cumulative 53 social bonds in public and private markets across 11 different currencies. Since 2017, IFC Social Bonds have been committed to support 153 eligible projects totaling $4.3 billion — reaching 2.6 million farmers, feeding 3 million people, and treating 1.6 million malnourished children.
"Over the past year, our world has changed irrevocably," said John Gandolfo, IFC Vice President and Treasurer. "In the realm of sustainable finance, the roles of issuers, investors, underwriters and data providers have become even more critical. The COVID-19 pandemic roiled financial markets, disrupted the businesses of many of IFC's clients, and severely impacted the private sector globally. IFC responded quickly to cushion the blow, announcing a $8 billion package of fast-track financing, and our social bonds program was a critical element in mitigating issues stemming from the COVID-19 crisis."
IFC was the first issuer to launch a U.S. dollar public benchmark social bond during the COVID-19 crisis. IFC's largest social bond – a $1 billion-dollar social bond – was issued on the same day that the World Health Organization declared the coronavirus outbreak a global pandemic on March 11, 2020. This issuance was subsequent to IFC's COVID-19 response package announcement. The trade attracted tremendous interest from investors with a final order book of over $3.4 billion, testament to investors keenly interested in supporting the alleviation of social issues in spite of the volatile market conditions at the time.
The Social Bond Program supports projects that aim to achieve positive social outcomes. Through the program, IFC finances social projects that are stipulated in the Social Bond Principles which include: affordable basic infrastructure, access to essential services; affordable housing; employment generation including through the potential effect of SME financing and microfinance; food security; and socioeconomic advancement and empowerment.
Covid-19 response bonds boost social & sustainability bond market
COVID-19 response bonds have been rapidly deployed to fund crisis relief and recovery; the value of such bonds issued in 2020 exceeded the total value of social and sustainability bonds issued in 2019. COVID-19 pandemic response bonds were the subject of the Q2 SSE Webinar; a summary of the discussions can be found here.
Stock exchanges facilitated the fast-growing market in COVID-19 response bonds by waiving listing fees and assisting listed companies, especially small and medium enterprises (SMEs), by providing fee relief and introducing flexibility in rules. A full analysis of this trend in COVID-19 response bonds was provided in the 2020 UNCTAD World Investment Report.
