Vaccine bond in strong demand

March 24, 2008

By Jack in London

Published: March 23 2008 20:19 | Last updated: March 23 2008 20:19

Japanese retail investors have fully taken up a pioneering $223m bond to

fund vaccination programmes in the developing world, paving the way for

further such offers in other markets in the future.

Individuals paying as little as $1,270 each bought all of a small second

issue from the International Finance Facility for Immunisation (IFFim),

which was denominated in South African rand and sold in Tokyo.

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The bonds “front-load” future governments’ aid donations pledged for

life-saving vaccinations through the Global Alliance on Vaccines and

Immunisation, providing investors’ money to save lives now, which will be

reimbursed by the sovereign donors making the aid contributions over the

coming years.

The first IFFim bond, which raised $1bn from institutions in London in 2006

and was underwritten by countries including the UK, France, Italy and Spain,

has already been almost entirely spent.

The new bond successfully tapped retail investors for the first time, via

the Japanese uridashi market, in what could be a prelude to raising money

from individuals in other markets less familiar with direct purchases of

bonds.

The IFFim has spurred popular support as people seek ways to help with

development issues, although their returns are underwritten by taxpayers via

governments with top credit ratings.

There was additional symbolism in the fact that the latest bond was

denominated in rand, given that South Africa has also pledged support to

IFFim – although the decision was purely a financial one, given the current

attractive terms for raising money in Japan and the appetite there for

certain foreign currencies.

The proceeds are converted immediately into dollars, the dominant currency

in which vaccines are purchased.

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