Logo of Phnom Penh Post newspaper Phnom Penh Post - Bond to funnel benefits to women

Bond to funnel benefits to women

A woman receives money from a finance officer at a Prasac Microfinance Institution branch in Phnom Penh in 2015.
A woman receives money from a finance officer at a Prasac Microfinance Institution branch in Phnom Penh in 2015. Hong Menea

Bond to funnel benefits to women

An $8 million bond set to debut on Singapore’s stock exchange will mobilise private capital to support social enterprises and microfinance institutions (MFIs) in Cambodia, Vietnam and the Philippines, providing nearly half a million women in these countries with more access to credit in order to improve their livelihoods.

The Women’s Livelihood Bond (WLB), billed as the first-ever social sustainability bond, was developed by Impact Investment Exchange (IIX), a Singapore-based organisation that works toward increasing the access to capital for social enterprises in Asia.

The WLB has a maturity of four years and a coupon rate of 5.65 per annum, according to IIX. The $8 million bond will initially list on the Singapore Exchange, though could eventually be migrated to the Impact Exchange, a Mauritius-based platform devoted to listing shares and bonds issued by impact enterprises, NGOs and social impact funds.

Proceeds from the bond will be used to provide loans to social enterprises and MFIs across Cambodia, Vietnam and the Philippines, enabling them to better serve women beneficiaries and improve their access to finance, essential goods, income-generating assets and vocational training.

An IIX spokesman said the bond saw a strong demand from global institutional and high net worth investors, with over 60 percent of these investors coming from Asia.

“IIX received a high level of interest for this bond from investors across geographies that were attracted by its dual focus in social and financial return,” the spokesman said.

“Having over 60 percent Asian investors was a big move for impact investing in emerging markets and a testament to IIX’s deep track record in the region.”

Forty percent of the loan proceeds, or about $3.2 million, will be channelled to Cambodia to support local MFIs, enabling them to expand their beneficial impact on women through credit creation and providing access to affordable goods and services.

“The underlying borrowers are sourced and screened through an intensive process which assesses the entities using both financial and social criteria,” the spokesperson said.

According to the bond’s information sheet, the borrower selection criteria requires that the institutions are financially stable and operationally mature, and have a focus on serving low-income or marginalised women as well as a commitment to improving their livelihoods.

To mitigate the bond’s risk, the United States Agency for International Development (USAID) has put up a 50 percent guarantee on the loan portfolio, while IIX is providing $500,000 first-loss capital.

“USAID is pleased to be backing the WLB with a loan guarantee. Working with Australian Department of Foreign Affairs and Trade, we are helping to mitigate risk and attract investors, as evidenced by the full $8 million capitalisation of this bond,” said Todd Sorenso, deputy mission director at USAID’s Regional Development Mission for Asia.

Robert Kraybill, managing director of IIX, said the WLB has received the support from a wide range of stakeholders, and more are expected to join.

“We are delighted to work with new partners such as DBS Bank, Shearman & Sterling, Hogan Lovells and ANZ Bank, who have helped in supporting our efforts to create this innovative financial structure for social good,” he said. “We look forward to bringing in new partners into this exciting space of impact investing.”

This article was corrected, as the company name and the selection criteria for the bond's information sheet was misstated. The company name should be Impact Investment Exchange, not Impact Investment Exchange Asia. According to the bond's information sheet, it should be the borrower selection criteria, and not MFI selection criteria.

MOST VIEWED

  • Hun Sen: Full country reopening to be decided in two weeks

    Prime Minister Hun Sen has announced that if the Covid-19 situation remains stable for 15 consecutive days from the end of the October 5-7 Pchum Ben public holiday, Cambodia will reopen fully, albeit in the context of Covid-19 whereby people have to adjust their lives to

  • Cambodia sets new Covid-19 quarantine rules

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Cambodia unveils new quarantine regulations

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Hun Sen: Cambodia set to fully reopen

    Prime Minister Hun Sen concludes that the October 5-7 Pchum Ben public holiday, during which many people either flocked to their hometowns for family reunion or gathered at tourist attractions across the country, has not caused an outbreak of Covid-19. In a special address to

  • Will Evergrande change the way Chinese developers do business in Cambodia?

    China’s property sector policy has exposed the grim financial condition of real estate developers including those operating in Cambodia, which raises questions over the viability of their projects and business going forward The dark blue netting draping over one of Yuetai Group Co Ltd’

  • Phnom Penh governor: Show Covid-19 vaccination cards, or else

    Phnom Penh municipal governor Khuong Sreng late on October 5 issued a directive requiring all people aged 18 and over and the parents of children aged 6-17 to produce Covid-19 vaccination cards when entering schools, markets, malls, marts, eateries and other business establishments that have been permitted