World Bank Introduces Sustainable Development Goals Index-Linked Bonds for Retail Investors in Hong Kong and Singapore
The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) has priced new bonds that offer retail investors in Hong Kong and Singapore the opportunity to promote the Sustainable Development Goals (SDGs). Returns on the bond are linked to an equity index that tracks the performance of companies advancing global development priorities set out in the SDGs, including climate, gender, and health. This marks the first time that the World Bank has offered SDG index-linked bonds to retail investors in Asia.
The return on investment in the bonds is directly linked to the stock performance of companies included in the Solactive Sustainable Development Goals World MV Index. The index tracks 30 companies that, based on the methodology developed by Vigeo Eiris’ Equities, dedicate at least one fifth of their activities to sustainable products, or are recognized leaders in their industries on socially and environmentally sustainable issues. Solactive applies volatility and diversification filters to reach the final index composition. Vigeo Eiris is a global provider of environmental, social and governance research to investors and public and private corporates.
Previously, the World Bank has issued SDG index-linked bonds in Belgium and Switzerland, with another offering currently underway in Australia.
The World Bank will use the proceeds to support the financing of projects that advance its goals of eliminating extreme poverty and boosting shared prosperity, and that are aligned with the SDGs.
The issuance builds on growing demand from institutional and retail investors for high quality, liquid assets that promote social impact. The five-year bonds raised US$3.52 million.
Earlier this year, the World Bank issued its first Hong Kong dollar-denominated green bond. The World Bank is also a frequent issuer in Singapore, with more than SGD2.7 billion in bonds issued for local investors since 2009.
George Richardson, World Bank Head of Capital Markets, said: “We are delighted to introduce World Bank SDG index-linked bonds to retail investors in Hong Kong and Singapore. The bonds respond to the strong and growing interest in socially responsible investments and for the World Bank’s development mandate from retail investors in Asia.”
The bonds are arranged by BNP Paribas as part of the “SDGs Everyone” initiative. Under the initiative, the World Bank issues bonds to support the financing of projects that support the SDGs, and investors benefit from the performance of companies included in the equity index.
Pascal Fischer, Head of Global Markets for APAC, BNP Paribas said: “BNP Paribas is committed to aligning its business to the UN Sustainable Development Goals. This transaction is a new frontier in how we can support investors in accessing innovative products that contribute towards a positive societal outcome and support the achievement of the SDGs.”
Standard Chartered is the sole distributor of the bonds.
Source: World Bank
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