Social bond of the year - supranational, sub-sovereign and agency: IFC

In March 2020, the IFC priced its largest ever social bond, raising $1 billion to finance access to essential services for the underserved in emerging markets, during the coronavirus pandemic.

Within the first hour of the books opening, the three-year bond, which has a coupon of 0.5%, had hit its target "despite a short bookbuild window", the issuer said. It received orders worth more than $3.4 billion from over 80 investors.

The bond was issued on the day that the World Health Organization officially declared the coronavirus a pandemic. This made IFC the first issuer to move swiftly and come to the market with a social bond linked to the institution's Covid-19 relief measures, it said.

"The trade was executed following the worst day in the financial markets since the 2008 crisis," the IFC said. "The biggest challenge was timing the deal right amid extreme volatility and constantly changing swap spreads. For that reason, IFC's funding team opted for an intraday execution."

It said examples of eligible use of proceeds included financing for research and development of Covid-19 tests or vaccines, and loans to small businesses negatively impacted by the economic slowdown caused by the pandemic.

The IFC was hailed by an Environmental Finance Bond Awards judge for its "prompt" response to the onset of the pandemic.

Another judge said: "This IFC bond enhanced the integrity [of the social bond market] and [the] structure set a standard for other Covid-19-related social bonds to follow. It came at a critical time and made a meaningful positive contribution to the immediate response but also has a lasting impact on market infrastructure and approach to deal with future events."

The IFC issued another four social bonds in 2020, worth a combined $1.5 billion, according to Environmental Finance's database.

The deals represented an acceleration of the IFC's social bond programme, which was launched in 2017. By the end of its fiscal year 2020, IFC had raised $3.1 billion through 39 social bonds in 10 currencies.

Deal Highlights

Issuer:  IFC
Size:  $1 billion
Maturity: 20 March 2023
Coupon:  0.5%
Use of Proceeds:  Covid-19 response
External Reviewer:  Cicero
Lead Manager:  Bank of America Merrill Lynch, Barclays, Credit Agricole CIB, DZ Bank