New bond raises $700m for child vaccinations

An innovative bond aimed at financing child vaccinations in some of the world’s poorest countries has raised $700m after attracting investors on five continents.

The bond, issued by the International Finance Facility for Immunisation (IFFIm), allows vaccination campaigns to go ahead immediately using investors’ money, which will be repaid in the future using government aid donations.

The three-year, floating-rate bond attracted central banks and institutional investors in the Middle East, Africa, Europe, Latin America and the US. The funds will be used to strengthen health systems and drive the uptake of existing and innovative vaccines in impoverished nations, via the non-profit Gavi Alliance.

“IFFIm's vaccine bonds prove that investments can make both financial sense and a social impact by saving lives,” said René Karsenti, IFFIm chair.

The bond, IFFIm’s fourth benchmark since 2010, was rated AA+ by Fitch’s Ratings and Standard & Poor’s.

“This global bond issue will fund immunisations for millions of children who need it the most,” said Jim Yong Kim, president of the World Bank Group, which is IFFIm’s treasury manager. “Having predictable, long-term funding in place will help us ensure that the world’s most vulnerable children have access to healthcare.”

IFFIm raised more than $3.7bn from 2006 to 2012 through bond programmes, capitalizing on $6.3bn of donor commitments from countries such as the UK, France and Italy.

Its first bond in 2006 raised $1bn from institutions in London, and was followed by further issuances in currencies such as yen, South African rand and Australian dollars.

The funds have enabled Gavi to almost double its spending on buying and delivering vaccines to the world’s poorest nations.

The vaccine body said earlier this year that it would consider issuing an Islamic bond, or sukuk, to attract investors in the GCC and wider Middle East.

“We’re definitely very interested, there’s no question about that,” David Ferreira, managing director for innovative finance, Gavi Alliance, told Philanthropy Age. “We’ve been speaking to people, both commercial banks and the Islamic Development Bank, about it, and it’s just a question of finding the right time. It’s difficult, technically, but we’re certainly not ready to give up.”

Gavi in March signed an agreement with the Islamic Development Bank (IDB) to help accelerate the delivery of vaccines in Islamic countries.