IFC Raises $2 Billion Through Largest Social Bond Issuance

The International Finance Corporation is a member of the World Bank Group, having issued its largest ever social bond by raising $2 billion through a three-year bond. This bond is the biggest US dollar-denominated social bond ever issued by a supranational, while the order book was an unprecedented $11 billion, underpinning strong demand from global investors.

John Gandolfo, IFC Vice President and Treasurer for Treasury & Mobilization, underscored the increasing influence of social bonds especially in redressing rising inequality and poverty. "With the escalating profile of inequality and poverty, social bonds have become a necessary vehicle to steer investments to critical projects in emerging markets," he said. These proceeds of this bond issuance shall support low-income communities of emerging markets for essential sectors that include health, education, food security, and infrastructure. In this sense, the underfunded initiatives benefitting under-served communities can be regarded as projects with social benefits through enhancement of access to education, better healthcare provision, and enhancing food security.

The proceeds from the bond will go to funding a variety of projects meant to improve the quality of life for vulnerable groups. Some of these projects are affordable infrastructure like clean drinking water, sanitation, energy, and transport. Some of the funds will also go to women-owned small businesses in support of gender equality and economic empowerment. The social bonds will also support projects addressing food insecurity, something that has turned more crucial with time in most the emerging markets.

The IFC's dedication to social bonds can be seen by the framework, updated to publish the bonds, receiving an "excellent" rating from leading provider of sustainable finance ratings Sustainable Fitch for meeting International Capital Market's Social Bond Principles. This endorsement talks to the IFC's compliance with international standards and its leadership in responsible investments that give social impact. The issuance of the bond under this framework aligns with the global drive for sustainable finance that addresses ESG challenges while promoting economic growth.

The market took the issuance very well. Despite the busy primary market, IFC successfully delivered the issuance with minimal new issue concessions, reflecting the excellent investor confidence in the institution's credit quality. The joint lead managers for the transaction included Barclays, Goldman Sachs, Nomura, and SEB, an involvement that further enhances the importance of the bond issuance in the global market.

Alex Paterson, Head of SSA DCM at Barclays, said: "The transaction was successful. The busy market environment did not deter the upsizing of the bond. IFC managed to achieve an upsized transaction at a minimal new issue concession.". Dorothee Amar, Co-Head of SSA at Goldman Sachs International, highlighted the impressive $11 billion orderbook as a testimony to IFC's robust credit quality and its appeal to global investors.

Nomura's Spencer Dove noted the bond's international appeal and its unprecedented spread compression. He pointed out, "The sheer volume and quality of the orderbook underscores IFC's position as a US dollar market favorite." This global response speaks to the strength of the IFC's brand and its ability to attract diverse investors seeking to support sustainable development.

Anna Sjulander of SEB said: "The feedback from international investors is a vote of confidence in IFC's leadership in developing the social bond market." Such strong demand for the bond points to increasing interest in social impact investing and the need to mobilize capital towards projects that could solve pressing social issues.

As one of the largest global issuers of social bonds, the IFC continues to play a crucial role in mobilizing capital for projects that promote equitable growth and improve living conditions in underserved regions. The funds raised through this bond issuance will be used to advance critical initiatives that address the needs of the most vulnerable communities in emerging markets, reinforcing the IFC's commitment to sustainable development and the promotion of social good.

This issuance is a milestone not only financially but also in terms of its signaling the increasing role of social bonds in the global financial landscape. The IFC is enabling the creation of a more equitable and sustainable future for communities in need by providing an investment vehicle for projects that help improve access to essential services and promote social inclusion. The success of this bond issuance further cements the IFC's leadership in the social bond market and its commitment to leveraging the power of capital markets for positive social impact.