ICO launches the sixth issue of social bonds, amounting to 500 million euros

ICO launches the sixth issue of social bonds, amounting to 500 million euros

  • Demand for this issue has been the greatest of all of ICO¿s social bonds, exceeding 2,500 million euros by over 100 investors.
  • 86% of the bonds have been divided among foreign investors.
  • Since 2015, ICO has issued six social bonds of an amount exceeding 3,050 million euros, making it one of the leaders in this market at the European level.
  • The fifth social bond issue financed 7,177 micro enterprise and SME projects and created or maintained over 61,800 jobs.
The Official Credit Institute (rated A/Baa1/A-/A by S&P/Moody's/Fitch/DBRS respectively) has launched its sixth issue of social bonds, amounting to 500 million euros.

The transaction was well received among investors who started to consider ICO¿s social bonds as the model in this market once again. In this regard, it should be noted that 45% of the issue was distributed amongst socially responsible investors (SRI). This transaction strengthens ICO¿s commitment to the development of the sector, to carrying out at least one issue of this kind each year.

The issue closed today is led by HSBC, J.P. Morgan, Santander and UniCredit, with a return rate of -0.286% and a period of 3 years. It is ICO¿s first public release with negative profitability.

The order books have registered a demand of over 2,500 million euros with more than 100 investors, a fact that has allowed the operation to close with a spread of 7 basis points over the Treasury¿s benchmark at the same time, the lowest so far for an ICO social bond.

In terms of the geographical distribution, it should be noted that 86% of the bonds were placed among foreign investors, including those from Asia and the Middle East, Germany and Nordic Countries.

Regarding distribution by type of investor, it is worth noting the demand registered by fund managers, who acquired 45% of the total volume of the issue, followed by central banks and official institutions (29%) and banks (23%). The rest of the security was distributed between insurers and pension funds.

The Institute was a pioneer and is currently one of the European leaders in the social bond market. Since 2015, it has already carried out six transactions for an amount of over 3,050 million euros to fund the projects of self-employed people and SMEs located in Autonomous Communities with a lower GDP per capita than the Spanish average.

Furthermore, in 2019, ICO launched its first green bond issue amounting to 500 million euros, to finance activities, investments and projects by Spanish companies that contribute to environmental protection and the fight against climate change. All these issues consolidate ICO as one of the benchmark issuers in the sustainable issue market.


ICO social impact bonds: report on the fifth issue

With the funds obtained through the social bond issues, ICO commits itself to financing the projects of self-employed people and micro-enterprises located in Autonomous Communities with a lower GDP per capita than the Spanish average, in order to promote inclusive economic growth and the necessary improvement in income distribution.

In accordance with the commitment to transparency acquired with investors, ICO distributes an impact report a year after launching this type of issue. In 2019, the Report on the fifth social bond issuecarried out in November 2018 for an amount of 500 million euros was published. With these funds, the public bank has funded 7,177 public operations of SMES mainly located in Andalucía, Galicia and Comunidad Valenciana. It is estimated that this activity has generated or maintained over 61,800 jobs.

Recognition of ICO in the sustainable bond market

ICO is totally committed to developing the market for finance and sustainable investment to promote inclusive economic growth and moving towards more sustainable.

ICO¿s sustainable issues make the Institute important and well-known amongst institutions that operate in the capital market. Recently, ICO has been appointed as a new member of the International Capital Market Association¿s (ICMA) Advisory Council of Green Bond Principles and Social Bond Principles.

ICO is the only entity in Spain and the only National European Promotional Bank that participates in this Advisory Council. This appointment is a recognition of the Institute¿s role as one of the benchmark issuers in the field of sustainable bonds on the European market; to date, ICO has made emissions of a value of 3,550 million euros, of which over one third of the total volume has been issued in the past twelve months.

The Institute is also an active member of the Working Group that drafted the ICMA¿s "Social Bonds Principles" Guide.

In 2018, ICO included sustainability criteria in the development of its activity as a cross-sectional fundamental element, both in its operations of assets and liabilities as well as in its internal organisation and operation.
In the context of the current global strategy, the commitment of the ICO Group (including AXIS, the venture capital company that is a wholly owned subsidiary of ICO and the ICO Foundation) to fulfilling the Sustaindable Development Goals.