35 years: Capital markets editorial
In the introductory video to this social bonds series, Keith defines a social bond and discusses their different applications. He further outlines the development of the social bond market along with the key challenges the market faces today.
In the introductory video to this social bonds series, Keith defines a social bond and discusses their different applications. He further outlines the development of the social bond market along with the key challenges the market faces today.
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10 mins 36 secs
Labelled social bonds finance or refinance projects intended to offer target populations opportunities for social and economic betterment and improved wellness. Eligible use-of-proceeds can span multiple sectors, so the social bond market has a wider group of potential issuers than the green bond market. Labelled social bonds have experienced a meteoric rise in 2020 as Covid-19 created large-scale need to fund public-health projects and economic fallout quickly.
Key learning objectives:
Describe labelled social bonds
Identify the areas social bonds have been issued to finance
Identify who issues social bonds
Understand how social bonds differ from conventional bonds
Understand how big the social bond market is
Outline some key challenges to the social bond market
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Hard data is difficult to come by as there are no formal regulations, rules or standards that define social bonds, and data providers have their own rules. Part of the challenge is that social bonds have emerged under many formats, while some bonds with social use of proceeds don’t even come with a social label. At the height of Covid-19, for example, close to $300bn in bonds of various types had Covid in the title or listed in use of proceeds. That included:
But only a small percentage of those can be considered social bonds in the way purists see the market: issued under social linked bond frameworks and aligned with the Social Bond Principles. With those filters, market participants put the social bond total for the first half of 2020 to $40bn.
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