Issuing Bonds to Invest in People

Why are investors looking at social bonds? With payoffs indexed to social outcomes, issuers such as Social Finance US look to tap into investor appetite.

Building on the tremendous momentum following the successful issuance of green bonds and green loans over the past few years, investors are becoming increasingly comfortable with socially meaningful forms of outcome-based financing.

In that spirit the success of programmes like those promoted by Social Finance US is a testimony to this trend. Focusing on financing programmes aimed at fostering reduction of drug use, better children care and enhancing foster care placements, it offers investors the option to subscribe to social bonds with a payoff indexed to better social outcomes for the targeted populations. As a key partner of the programme, BNP Paribas played a vital role in ensuring a successful road to market for the project.

Social bonds have slowly gained momentum. In bringing financial incentives to the world of public policies and charities, they introduce an element of quantification to outcomes, which is helping to nurture more incentive-based behaviour. More importantly it shows that impact investing of this kind mostly works and achieves its goals.

Issuing Bonds to Invest in People

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Why are investors looking at social bonds? With payoffs indexed to social outcomes, issuers such as Social Finance US look to tap into investor appetite.

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Financial innovation, Covid-19 and climate change have all come together to spur finance into action. With the flurry of recent debut transactions using the mechanisms of sustainable finance – with a focus on social as well as environmental goals – has ESG finally crossed the Rubicon?