The Republic of Iceland issued a EUR50 million gender bond, marking a first for the sovereign debt markets.
Eligible projects for the financing include the provision of decent living standards for women and gender minorities, increasing the supply of affordable housing that benefits low-income women, as well as efforts to increase maximum payments during parental leave which create incentives for both parents to make use of their equal right to paid parental leave.
The bond bears a 3.4% fixed rate coupon and a 3-year maturity, and the transaction was a private placement issued to Franklin Templeton, arranged solely by BNP Paribas.
In April 2023 Iceland issued an annex to its Sustainable Financing Framework (The Financing for Gender Equality Annex), which sets out how the country intends to mobilise finance to achieve world-leading gender equality targets.
The country has expanded its sustainable finance engagement within capital markets, and this new gender bond marks the latest innovation following the Republic of Iceland’s inaugural green bond issuance earlier this year, in which BNP Paribas was joint lead manager.
A world leader in gender equality
Iceland ranks as one of the most gender equal countries in the world and has topped the World Economic Forum’s Global Gender Gap Index for the past 14 years. Nevertheless, the country has continued to push for absolute gender equality and strive for greater social and economic advancement of women across society.
The link between gender equality and enhanced resilience of companies and economies has been reinforced in recent studies. For example, a recent McKinsey study on diversity and inclusion found that organisations in the top quartile of gender diversity were 27% more likely to have a better financial performance versus the bottom quartile.
Sigurður Ingi Jóhannsson, Minister of Finance and Economic Affairs said: “The gender bond is an exciting addition to our portfolio of sustainable debt, as we issued our first green bond earlier this year. By being the first sovereign to issue a gender bond, Iceland is using its international leading position when it comes to gender equality to set an important example for other nations with a new approach to mobilising financial markets and public finance to promote gender equality.”
Frederic Zorzi, Global Head of Primary Markets at BNP Paribas: “It is a privilege to have supported the Republic of Iceland in this first sovereign gender bond, which demonstrates the country’s vision and leadership in harnessing capital markets to tackle gender equality. The progressive use of proceeds also positively supports economic resilience and the social advancement of women, paving the way forward for sovereigns to innovate across public and private finance.”
❝ It is a privilege to have supported the Republic of Iceland in this first sovereign gender bond, which demonstrates the country’s vision and leadership in harnessing capital markets to tackle gender equality. ❞