APG invests $50m in 'racial equality' bond

Channels: IMPACT

Companies: APG, Bank of America, Urban Institute

People: Joshua Linder

Netherlands-based pensions asset manager APG has invested $50 million in Bank of America’s $2 billion 'Equality Progress Sustainability Bond’ that was issued last month.

The proceeds of this bond will be used to finance projects for affordable housing and socio-economic advancement, and will explicitly be targeted at addressing social and economic disparities in underserved minority communities.

Joshua Linder, credit analyst for fixed income at APG Asset Management, said: “America’s Black and Hispanic communities have been especially hard hit by the Covid-19 crisis. As a result, these disparities have widened. We find the use-of-proceeds impactful as it addresses a number of specific and clearly identified inequalities.”

On its investment decision, APG cited research from the Washington D.C.-based think tank Urban Institute that indicates that only 47% of Black families and 51% of Hispanic families own their homes, compared with 76% of White families.

Other uses of the $2 billion bond proceeds include loans and investments in affordable housing, financing for medical professionals to expand medical services in areas with large Black and/or Hispanic populations, and investments in Black and Hispanic owned or operated businesses. As a sustainability bond, the investment finances a mix of social and green projects, including renewable energy and clean transportation projects.

Bank of America has previously issued six green and social bonds, from which it has raised a total of $6.85 billion, according to Environmental Finance’s database.

€538 billion Dutch asset manager APG is one of the world’s largest investors in green, social and sustainable bonds; at the end of 2019, it had invested €9 billion ($10.6 billion), it said.

In May, it said it had invested €554 million in ‘Covid-19 bonds’, a market it estimated could be as large as €60 billion at the time. Proceeds from these bonds are earmarked for financing a range of measures, including expansion of healthcare services and support to SMEs, an APG statement said.

Christopher Marchant