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IFC Launches Innovative Social Bond Program, Raising $500 Million through Benchmark Bond


In Washington, D.C.:
Frederick Jones
Phone: (202) 473-9336
E-mail:
fjones@ifc.org  


Washington, D.C., March 22, 2017—IFC, a member of the World Bank Group, today issued a $500 million global benchmark bond, launching an innovative Social Bond Program to expand financing for projects that benefit women-owned enterprises and low-income communities in emerging markets.

The three-year bond was 1.4 times oversubscribed. It was bought by more than 40 institutional investors across the world—including central banks, official institutions, pension funds, and fund managers. The size of the issuance helps deepen the market for a new but rapidly growing category of sustainability bonds.


IFC will use the bond proceeds to finance projects that help improve social outcomes—specifically by providing finance to companies that buy from smallholder farmers, provide utilities for low-income households, offer affordable health services, education, or housing to low-income people. The funds will also be used to support financial institutions that lend to women-owned enterprises.


“IFC is committed to achieving more efficient and self-sustaining financing in emerging markets through the broader use of innovative capital-markets tools,” said Jingdong Hua, IFC’s Vice President for Treasury and Syndications. “Our social bond creates an attractive alternative for investors seeking triple-A rated impact-investment products. We will continue to bring innovation and transparency to the Environment, Social and Governance bond market, unlocking additional funding for development.”


IFC established the Social Bond Program to meet investor demand for regular benchmark issuance by merging two existing socially responsible bond products—the Banking on Women Bond Program and the Inclusive Business Bond Program. Those two programs have raised $268 million and $296 million respectively since 2013.

Investors in the $500 million social bond included Affirmative Investment Management, the California State Teachers’ Retirement System, Calvert Research and Management, the International Fund for Agricultural Development, the Praxis Impact Bond Fund, QBE Group, the United Nations Entity for Gender Equality and the Empowerment of Women and the United Nations Development Programme. Twenty percent of the investors were first-time investors in IFC bonds.


"Affirmative Investment Management (AIM) is very pleased to invest in IFC’s inaugural Social Bond,” said Stuart Kinnersley, the company’s co-founder and CEO. “AIM feels it broadens the universe of mainstream bonds that generate meaningful positive social impacts, while fulfilling the strict criteria required under our internal verification processes."

Gary Brader, Group Chief Investment Officer for QBE, said: “We are delighted to participate in the IFC Social Bond program, which can profitably and sustainably support access to finance for women entrepreneurs, as well as low-income communities in emerging markets. It is an excellent example of the blending of a very high-quality issuer, an appropriate return to the investor, and the overlay of additional social objectives being pursued. This fits very nicely with our Premiums4Good initiative, whereby we undertake to invest a portion of selected customer premiums into assets which are socially or environmentally beneficial.”


IFC has played a leadership role in developing guidelines and procedures for the green bond market and the burgeoning social bond market. IFC acts as co-chair of the working group on Social Bonds established by the Green Bond Principles Executive Committee. In line with the Social Bond Guidelines, the IFC Social Bond program is augmented by an
annual impact report providing investors with detailed information on the underlying projects supported by the bonds.

IFC Social Bond Terms

Issuer: IFC (International Finance Corporation)
Amount: US$500 million
Settlement date: March 30th 2017
Maturity date: March 30th 2020

Issue price: 99.942%

Coupon: 1.75%

Denomination: USD 1,000
Listing: London Stock Exchange
Underwriters: Citi, Credit Agricole CIB, JP Morgan


Distribution of Orders

Investor Type

Banks: 11%

Central Bank/Official Institution: 34%
Fund Managers: 55%

Geography  

Americas: 52%
Asia Pacific: 14%
Europe, Middle East and North Africa: 34%


About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit
www.ifc.org

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