Vaccine bond raises $1 billion for immunisations after record demand

By Tommy Reggiori Wilkes

LONDON (Reuters) -The latest vaccine bond has raised $1 billion to fund new immunisation efforts in the world’s poorest countries after record demand from investors, the International Finance Facility for Immunisation (IFFIm) said.

IFFIm, which raises funding for the UN-backed Gavi vaccine alliance, said in a statement it had priced a $1 billion, 3-year fixed-rate bond “to fund critical vaccine research and immunisation programs” and to respond to infectious disease outbreaks.

The order book for the bond topped $4 billion, IFFIm’s largest to date. The bond was IFFIm’s largest single transaction in the primary market since its first benchmark bond in 2006.

Gavi relies on its 11 sovereign donors for funding, but IFFIm helps by bringing in cash quickly from investors to meet the alliance’s immediate needs, with the money repaid over time out of future donor pledges.

The alliance said in June it wanted $9 billion from governments and foundations to fund immunisation efforts between 2026-2030 with an aim to protect 500 million children. IFFIm was expected to mobilise about 20% of the funding.

“The success of this bond highlights the ongoing strength of IFFIm’s model, which leverages sovereign support and strong financial structuring to offer investment opportunities that make a positive impact on children’s health,” Sania Nishtar, CEO of Gavi, said in a statement.

Vaccine bonds have proven popular as more socially conscious investors seek out investments directly linked to immunisation efforts and which are backed by IFFIm’s double-A credit rating.

IFFIm has provided $5.8 billion to Gavi so far to fund routine immunisations, healthcare support and COVID-19 vaccine rollouts.

Social bonds, where the proceeds are tied to specific causes such as immunisations or repairing healthcare systems, increased in popularity during the pandemic as development agencies and countries turned to them to tackle COVID-19 and the economic downturn.

Two thirds of investor interest in IFFIm’s new bond came from central banks and official institutions, and the rest from asset managers, insurance and pension funds and banks, IFFIm said.

BofA Securities, HSBC, and TD Securities were lead managers on the bond, which was priced at 20.7 basis points over the reference U.S. Treasury.

(Reporting by Tommy Reggiori WilkesAdditional reporting by Karin Strohecker and Rodrigo CamposEditing by Iain Withers, Elaine Hardcastle and Toby Chopra)