Social sustainability bond to debut on SGX

The Singapore Exchange (SGX) Centre in Shenton Way.
The Singapore Exchange (SGX) Centre in Shenton Way. PHOTO: ST FILE

SINGAPORE - A new bond to debut on the Singapore Exchange, called the Women's Livelihood Bond, said to be the world's first social sustainability bond to be listed on a stock exchange.

The US$8 million bond provides loans to social enterprises and microfinance institutions, which, in turn, aim to help more than 385,000 women in Cambodia, the Philippines and Vietnam.

Singapore-based firm Impact Investment Exchange (IIX), which is dedicated to social enterprises and impact investing, worked with DBS Bank on this.

The four-year bond offers a coupon rate of 5.65 per cent per annum.

IIX founder Durreen Shahnaz said in a statement on Thursday (July 6): "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."

It has received more than 60 per cent of its investment capital from Asian investors, with the majority being high net worth DBS customers.

The bond includes credit protection features, including US$500,000 of first-loss capital provided by IIX, as well as a 50 per cent guarantee of the principal amount of the underlying loan portfolio, provided by the US Agency for International Development.

Besides DBS, other stakeholders come from the public, private, and philanthropic sectors, including the Rockefeller Foundation and the Clinton Global Initiative.

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 eco-system it has built as a leading hub for tech start-ups.

"The WLB 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.

Ms Shahnaz added: "The infrastructure for social capital markets is now taking off. This transaction brings us one step closer to a day when our financial markets consider social and environmental impact on an equal footing with financial returns."