The Banker magazine profiled the BNP
Paribas’ teams behind the recent Covid-19 response bonds, discussing how these
new types of social bonds are helping finance vital crisis responses. The
Banker spoke to the team about the development of the market, issuer rationale,
and the overall ESG landscape in the wake of Covid-19. BNP Paribas has
supported clients to issue over US eq. $59 billion of Covid-19 response bonds
in 2020, in a market that has grown to over $100bn, according to Bloomberg and BNP Paribas data.
” BNP Paribas has supported clients to issue over US eq. $59 billion of COVID-19 response bonds in 2020.”
The bank’s expertise in sustainable
finance and debt capital markets was a driving force behind the development of
these crisis response funding mechanisms. “We have dedicated people for ESG in structuring and in syndicate,” said
Delphine Queniart, Global Head of Sustainable Finance and Solutions, Global Markets
at BNP Paribas.
With Covid-19 response bonds, investor
capital is channelled to pre-defined use of proceeds that tackle social causes.
“They provide clarity for investors by identifying a project or asset, usually
to support employment, by small and medium-sized enterprise (SME) lending, or
healthcare systems,” explained Agnes Gourc, Co-Head Sustainable Finance
Markets, BNP Paribas to the Banker magazine.
Most issuers of Covid-19 response
bonds were government agencies that raised additional funds in support of
crisis responses, said Jamie Stirling, Head of SSA DCM at BNP Paribas.
The bonds themselves were heavily
oversubscribed. Benjamin de Forton, DCM
public sector origination banker at BNP Paribas who worked on many of the
Covid-19 deals, highlighted an example of how the European Investment Bank
(EIB)’s €1 billion Sustainability Awareness Bond – which supports European
companies, health interventions and the economy – attracted €7.3bn of demand and
was over 7 times oversubscribed.
Most of the recent Covid-19 response
bonds follow the International Capital Markets Association’s (ICMA) Social Bond
Principles, which outline issuers’ obligations. These includes project
evaluation and selection, management of proceeds and reporting.
BNP Paribas supporting the development of international social bond standards
|