'Women's livelihood bond' to list on SGX

A new bond of its kind, designed to foster social sustainability, called the "women's livelihood bond", will soon debut on the Singapore Exchange (SGX).

The US$8 million (S$11 million) bond offers loans to social enterprises and microfinance institutions which, in turn, aim to help more than 385,000 women in Cambodia, the Philippines and Vietnam, said DBS Bank yesterday.

Singapore-based firm Impact Investment Exchange (IIX), which is dedicated to impact investing, worked with DBS on the project.

The four-year bond offers a coupon rate of 5.65 per cent a year, and aims to be listed within a month.

IIX founder Durreen Shahnaz said in a statement yesterday: "The closing of the bond is a landmark achievement for the impact investment market, demonstrating that impact investment products can achieve scale, transparency and liquidity, and appeal to a wide range of investors."

More than 60 per cent of the bond's investment capital comes from Asian investors, and the majority are high-net-worth DBS customers.

The bond includes credit protection features, such as US$500,000 of first-loss capital provided by IIX.

There will also be a 50 per cent guarantee of the principal amount of the underlying loan portfolio, noted DBS.

Besides DBS, other stakeholders come from the public, private and philanthropic sectors.

Ms Tan Su Shan, DBS group head of consumer banking and wealth management, said Singapore is "well-placed to become a regional hub for impact investing", and it can also use the infrastructure and ecosystem it has built as a leading hub for tech start-ups.

"The bond is a modest but important first step and we will continue to work closely with partners like IIX to bring innovative financial instruments to investors in Asia who are seeking to combine social and financial returns," she added.

A version of this article appeared in the print edition of The Straits Times on July 07, 2017, with the headline ''Women's livelihood bond' to list on SGX'. Print Edition | Subscribe