Market focus: Coronavirus Bonds

How to deal with the social and economic fallout from the COVID-19 epidemic? Investors are increasingly turning to coronavirus bonds.

Over the past few weeks, the market has seen a surge in public sector and corporate issuers accessing the sustainability bond market to raise funds to address the social and economic fallout from the coronavirus. Issuance has mirrored the geographic path and speed of the spread of the virus. 


CoronavirusA coronavirus bond is a bond for which the funds raised aim at contributing to the fight against the current Covid-19 outbreak and help alleviate the severe social and economic impacts brought about by the outbreak. 

There is a wide application for coronavirus bonds, with varied potential areas of financings: the health sector, supply chain for food security, access to basic infrastructure and services as well as maintaining employment, and supporting economic impacts for the society. SSA issuers finance health infrastructure and economic support towards vulnerable populations, in particular in developing countries. Some corporates are providing essential services and critical care products. Financial institutions are highlighting their support to SMEs.

A large number of these transactions are structured as social bonds. Indeed, the four core components of the Social Bond Principles (SBP) ensure an adequate level of transparency to the investors. The issuer announces its intention of proceeds allocation and commits to release a report within the year after issuance on the actual allocation and its expected positive social outcome.


Coronavirus bonds

Coronavirus bonds have proven to be an efficient opportunity to communicate on pandemic crisis actions and funding needs, while proactively engaging with the investor community:

  • They demonstrate the responsibility of issuers’ institutions and their capacity to provide a rapid and effective response.
  • Beyond the traditional subset of ESG/SRI* investors that invest in Social Bonds, the global investor community is present, motivated by the situation and its emergency. Providing a rationale to an issuance is strongly recognized by the capital markets in this context.
  • For the issuers that have used their Social Bond Framework, aligned with the SBP and committed to impact reporting, we have seen a notably large and granular order book, with additional orders coming from the dedicated Green and Social Bond investors in the US, Europe and Japan in particular. However, given the urgent need for funds to be deployed quickly, the development of a Social Bond Framework and the securing of a Second-Party Opinion may take place post-trade. 


*ESG: Environmental, social and governance
SRI: Socially responsible investments


COVID-19 Response Social Inclusion Bond issued by the Council of Europe Development Bank (CEB) on April 2nd – EUR 1bn, April 2027

In line with its commitment to support member countries affected by COVID-19, the CEB intends to allocate an amount equivalent to the proceeds raised to eligible Social Loans, including support for MSMEs, aligned with its Social Inclusion Bond Framework. SIB-eligibilities will also be extended to include Health projects.

The CEB is fully committed to providing flexible and timely financing to its member countries in response to the COVID-19 outbreak. The Bank has adapted its Public Finance Facility (PFF), a financing instrument aimed at national and sub-national public sector partners, to cover: the acquisition, under emergency procedures, of medical equipment and consumable material; the rehabilitation and transformation of spaces, medical units; and the mobilization of additional expertise.

Crédit Agricole CIB acted as a Joint Bookrunner.

Sustainable Development Bond issued by the Inter-American Development Bank (IADB) on March 27th – USD 2bn, 5-year

This issuance, aligned with the IADB Sustainable Development Bond Framework, follows a recent announcement by the IADB that it has up to USD 2bn in resources to mobilize for countries requesting support in disease monitoring, testing and public health services, as part of its coordinated efforts to fight the COVID-19 outbreak.

The IADB is actively engaged with member countries and other international institutions, and is prepared to help countries throughout Latin America and the Caribbean cope with challenges posed by the pandemic.

Crédit Agricole CIB acted as a Joint Bookrunner.

Fight COVID-19 Social Bond issued by the African Development Bank (AfDB) on March 26th – USD 3bn, 3-year

On March 26th, the AfDB priced a USD 3 billion 3-year Fight COVID-19 Social Bond, leveraging its Social Bond Program aimed at alleviating the economic and social impact the pandemic will have on livelihoods and Africa’s economies. This is the market’s largest social bond to date as well as the largest USD benchmark for the AfDB.

The transaction saw very strong support from Socially Responsible Investors with dedicated portfolios as well as those who integrate Environmental, Social and Governance considerations into their investment strategies.

Crédit Agricole CIB acted as a Joint Bookrunner.

Social Bond issued by the IFC on March 11th – USD 1bn, 3-year

On March 11th, despite very volatile markets, IFC successfully priced its largest Social Bond – a USD 1bn (no-grow) 3-year Global SEC Exempt transaction.

The deal was launched shortly after IFC, the largest development finance institution supporting the private sector in emerging markets, announced a USD 6bn package to support countries affected by the global outbreak of COVID-19. Issued under IFC’s Social Bond Program, proceeds will support emerging markets-based companies whose businesses have been hit by the coronavirus.

Crédit Agricole CIB acted as a Joint Bookrunner.

Social bond issued by the Bank of China’s Macau Branch on February 27th – HKD 4bn, March 2022

On February 27th, the Bank of China Macau Branch launched a MOP 5bn-equivalent Social Bond, the first international Social Bond issuance with proceeds explicitly tied to addressing the coronavirus.

The proceeds went to funding its SME Loan Program to assist local SMEs affected by the coronavirus epidemic. The transaction was not only the first linked to COVID-19, but the first-ever Chinese Social Bond in the international market.

Crédit Agricole CIB acted as a Joint Bookrunner and Joint Lead Manager.