Durreen Shahnaz

Impact Investment Exchange (IIX) has successfully listed the US$30 million Women’s Livelihood BondTM  for Climate (WLB4Climate), the fourth bond in the award-winning Women’s Livelihood BondTM Series (WLB Series) on the Singapore Exchange (SGX).

Advancing a total of 14 United Nations Sustainable Development Goals (SDGs), the WLB4Climate will support an estimated 500,000 underserved women and girls in Asia to build resilient, sustainable, climate-friendly economies in the region. The listing of WLB4Climate makes it the fourth gender lens bond to be listed on a public stock exchange. The other three listed bonds include the first three issuances of the Women’s Livelihood BondTM Series (WLB 1, WLB 3, and WLB 4).

The WLB4Climate brings together a global coalition of public and private sector partners committed to creating gender equality in climate finance with ANZ as the lead placement agent and Standard Chartered Bank and Barclays supporting. Partners include the United States Agency for International Development (USAID) and the DFC, the global law firms Shearman & Sterling, Clifford Chance, Latham & Watkins, Paul Hastings, Harneys Westwood & Riegels; India-based law firm Cyril Amarchand Mangaldas; Singapore-based TSMP Law Corporation; New Zealand law firm Chapman Tripp; securities service NetRoadShow; and World Resource Institute’s Partnering for Green Growth and the Global Goals 2030 (P4G).

IIX’s CEO and Founder, Professor Durreen Shahnaz, said, “The listing of WLB4Climate continues IIX’s journey of connecting the backstreets of underserved communities to the Wall Streets of the world. The Global South cannot wait for rich nations to disburse financial aid to compensate for and mitigate the devastating damage caused by climate change. This is a death sentence to the very communities that fuel developing economies—especially women. When we first created the Women’s Livelihood Bond Series in 2017, we were creating a financial instrument that would change these systemic inequalities. With each new bond in the WLB Series, we’re building an entirely new asset class by and for the Global South that empowers developing countries with real results, rather than pledges and dialogues.”

With listing each bond on the Singapore Exchange to ensure that women are at the pinnacle of financial markets, the US$150 million WLB Series, a series of innovative debt securities, creates sustainable livelihoods for over 3 million women across developing countries. The WLB4Climate is supporting women-focused enterprises in India, Indonesia, Cambodia, and the Philippines that are directly enabling women to create livelihoods that sustain themselves, their communities, and the planet, creating an ecosystem of climate-friendly small and medium sized enterprises (SMEs).

The effects of climate change are most acutely felt by women in the developing world, who are trapped in subsistence living due to high structural barriers to gaining self-sufficiency. With over 60% of all working women in South and Southeast Asia employed in agriculture, bringing together climate action and women’s livelihoods is particularly important in Asia where the majority of the labor force participates in sectors impacted by climate change like agriculture, forestry, and fisheries. With innovative financing to support transitioning women and girls to affordable, clean energy, the WLB4Climate will enable them to be a part of the solution to achieving a net zero economy.

Paul White, Head of Capital Markets at ANZ, said, “The WLB4Climate bond has expanded its reach and impact by linking a diverse group of borrowers in Asia and expanding into new sectors. The broad spectrum of investor demand underpins the growing momentum among investors looking for a positive impact investment while earning an attractive return on their capital. ANZ is proud to have worked with IIX on the WLB4Climate bond that improves the livelihoods of up to half a million women and girls in Asia, as well as the environment with the first sustainability bond from the WLB series.”

IIX launched the first of the WLB Series, the world’s first impact investing instrument to be listed on a stock exchange, in 2017. Following the success of the WLB1, IIX issued the US$12 million WLB2 in January 2020 and US$27.7 million WLB3 in December 2020. Each issuance continues to grow the series, which is set to include new sectors and expand the geographical footprint of gender-lens investing with the introduction of new impact themes. With a solid risk-return-impact structure, the bonds continue to give steady financial and social returns even with the market dropping more than 1000 points in recent days. The steady performance of the Women’s Livelihood Bond series mirrors the strong financial and social performance of the microfinance institutions in 2008 when the rest of the financial markets experienced a complete meltdown.

Borrowers from the third issuance of the Bond series reported that water and sanitation facilities obtained through financing from the Bond have been critical to their pandemic resiliency, improving health outcomes with the added benefit of increasing borrowers’ incomes by allowing them to utilize their time for employment. From preparing women farmers to better respond to environmental shocks and maintain their yields through stresses caused by climate change-related extreme weather events to financing cleaner electronic transport and solar rooftop panels, WLB4Climate is expected to impact between 400,000 to 500,000 underserved women and girls across Asia.

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With all coupon payments and principal payments made on time, even throughout the COVID-19 pandemic, the Bond provided investors with an annual return of 5.65% from 2017-2021. The WLB1 is the first issuance of the US$150M Women’s Livelihood Bond Series, a series of innovative debt securities that creates sustainable livelihoods for over 3 million underserved women across the Asia-Pacific and other emerging markets. In addition to its strong financial performance, all social performance targets, including targets for increased financial inclusion and financial resilience, were met or exceeded, demonstrating the sustainability of the bond’s underlying portfolio throughout the pandemic.

Durreen Shahnaz, IIX CEO and Founder, said: “This is history in the making. When we created the world’s first exchange listed financial instrument for women over four years ago, we were faced with a lot of scepticism from financial institutions at the idea of a women-focused financial instrument. They were wrong, and we doubled down on our vision to connect the Back Streets of the world to Wall Street and make the markets work for underserved women. Our CIO, Robert Kraybill, and I,  believed so much in the promise of the WLB1 that we committed our own personal savings to provide the first loss capital in the WLB1. With this vote of confidence, the Bond immediately sold in the market. Four years on, the women never failed us or the investors once, allowing us to make every single payment on time.”

The WLB1 is the first bond in the award-winning WLB Series, piloted with the support of partners such as the United States Agency for International Development (USAID), The Rockefeller Foundation, ANZ, DBS, Shearman & Sterling, and Hogan Lovells. Private investors in the WLB Series benefit from first loss capital and a 50 percent loan portfolio guarantee provided by USAID and the U.S. International Development Finance Corporation (DFC). The WLB Series has received several global multilateral awards, including the United Nations Climate Action Award and the Partnering for Green Growth and the Global Goals (P4G) State-of-the-Art Partnership Award.

“DFC is proud to have contributed to the Women’s Livelihood Bond 1, which has proven through its financial success the transformative power that women, when empowered, can have on their economies and communities,” said Algene Sajery, Vice President of External Affairs and Head of Global Gender Equity Initiatives at DFC. “By increasing financial inclusion and resilience among underserved women in Southeast Asia, the WLB1 has made a difference in the lives of many, and paved the way for gender-lens impact investing for many years to come.”

Juniper Neill, Acting Mission Director for USAID/Regional Development Mission for Asia, said: “USAID is proud to support efforts like these across ASEAN that help build a more resilient, inclusive, and secure Southeast Asia. USAID is pleased that our work to establish a loss guarantee for this innovative bond helped advance market innovations once presumed too risky to undertake. The Women’s Livelihood Bond proves that investing in women generates strong social, environmental, and financial returns for investors.”

“The Rockefeller Foundation’s support for the Zero Gap initiative reflects our commitment to reimagine how private capital can help solve some of the world’s most pressing problems, so we are thrilled to see the success of the IIX’s Women’s Livelihood Bond 1,” said Dr. Rajiv J. Shah, President of The Rockefeller Foundation. “Not only does this success represent a landmark in attracting private sector support to sustainable development for emerging markets, it comes at a moment when we need public, private, and philanthropic support to ensure a sustainable, equitable recovery and build a brighter future for women and girls.”

Kyungwon (Won) Lee, Partner at Shearman & Sterling, said: “The Women’s Livelihood Bond Series was a fantastic example of how capital markets lawyers can provide meaningful pro bono assistance to underserved communities in Asia. We were thrilled to have this rare opportunity to apply our skills for the best of causes and to be recognized for the innovation behind such work through the Financial Times’ Innovative Lawyers Award.”

Paul White, Head of Capital Markets at ANZ, said: “As a partner with IIX since the first issuance of the WLB Series, ANZ has seen increasing investor appetite for this innovative instrument that delivers positive social impact by creating viable livelihoods for women in marginalised communities in Southeast Asia. Now working with IIX on the next issuance, Australian and New Zealand institutional investors and pension funds, family offices, and high net-worth individuals continue to be attracted to the WLB Series for its innovative structure, investment impact and gender-lens outcomes.”

The WLB1 offered a stable 5.65% yield, which compares favorably to the 2020 average of 4.0% returns for Asian high yield corporate bonds, and 1-3% returns on social bonds. The success of the WLB1 comes at a time when Social Bonds are taking off in Asia. Within the sustainable debt market, Asia’s Social Bond issuances have grown to 23% of the global total in 2020.

One of the key innovations of the WLB1 is to pool together a basket of women-focused enterprises across the region that are positively benefitting underserved communities, offering investors diversified risk, return, and impact. All borrowers achieved their impact targets over the 4-year life of the bond, and continued to serve their beneficiaries despite the COVID-19 pandemic. The WLB1 is creating 450,000+ sustainable livelihoods for women across Southeast Asia.

Demonstrating the scalability and replicability of the WLB Series, IIX will be launching the fourth Women’s Livelihood Bond 4 Climate (WLB4Climate), the world’s first multi-continental sustainability bond, and will build on the success of the past issuances by expanding to include more countries in Asia and Africa and new sectors.

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