Investor appetite for coronavirus social bonds was high in Q2 according to the Capital Markets Authority (CMA) second-quarter soundness report released earlier this week. According to CMA’s tally, governments, institutions, and corporates have raised over $151.5 billion by selling COVID19 response bonds.
As other global assets are experiencing a decline, investors are looking at a new class of bonds . Social bonds are seen as the most prominent bonds in 2020 as they are aimed at mitigating social issues.
Since the onset of coronavirus, various countries and private entities have issued social bonds that will help public and private sectors access the critical capital required during the pandemic.
CMA opines that the COVID19 pandemic has left many people across the globe suffering from the downturn brought by the impact of the pandemic on economies. Therefore, social bonds are critical at this stage to address health needs, restore economic stability, and preserve jobs.
| Jurisdiction/institution | Period | Description |
| African Development Bank (AfDB) | March 2020 | AfDB sold a three-year $3 billion bond with coupon rate of 0.75 per cent which was oversubscribed attracting orders in excess of $4.6 billion. It was listed on the London Stock Exchange (LSE). |
| International Finance Corporation (IFC) | March 2020 | IFC sold a $1 billion dollar-denominated social bond. |
| Inter-American Development Bank (IADB) | March 2020 | IADB launched a five-year dollar denominated social bond. |
| Council of Europe Development bank (CEB) | April 2020 | CEB issued a €1 billion seven-year maturity COVID-19 Response Social Inclusion Bond whose proceeds will be used to support CEB member countries. |
| Members of West African Monetary Union (UEMOA) | April 2020 | UEMOA members announced plan to issue $1.4 billion bond on the regional market to benefit Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo. |
| Togo | May 2020 | Togo announced plans to issue Covid-19 social bond on the UEMOA stock market, seeking a total of XOF108 billion. The bond was to have a nominal value of XOF1 million per unit, and mature over three months. |
| Cote d’Ivoire | May 2020 | Cote d’Ivoire successfully raised a total of CFA180 billion (about $297 million) to support the Ivorian government in the fight against the Covid-19 pandemic |
| Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) | May 2020 | The Spanish entity successfully issued a 1bn Euro 5-year Senior Preferred bond to finance social projects in healthcare, education, affordable housing or financing for small and medium enterprises. |
| Ford Foundation, USA | June 2020 | The Ford Foundation launched a plan to issue a ‘historic’ $1 billion social bond in response to the existential threat caused by Covid-19 to non-profit organizations. |
CMA recommends that countries consider the issuance of social policy bonds to fund the health sector and leverage on the capital markets to raise resources to manage the pandemic.
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