ICO launches its third issue of social bonds for €500 million

ICO launches its third issue of social bonds for €500 million

Instituto de Crédito Oficial (Baa2/BBB+/BBB+/AL) has returned to the social bond market with a €500 million issue. With this transaction, ICO becomes the first issuer to have three issues of this kind on the market, amounting to a total of €2 billion.

The issue, managed by HSBC, Goldman Sachs and Crédit Agricole, pays a coupon of 0.10% and has a term of four years.

ICO¿s new social bond issue was well received by the market. The order books showed demand of over €800 million. That made it possible to close the transaction with a spread of 8 basis points above the reference Spanish treasury bond with the same maturity.

49% of the transaction has been placed with accredited socially responsible investors (SRIs), which reflects the favourable reception of the ICO bonds among the specialist investor base. As regards distribution by investor type, there was outstanding demand from asset management companies, which have acquired 34% of the total issue, followed by insurers and pension funds, with 29%, and banks, with 22%. The rest of the paper has been distributed among central banks.

Regarding the geographical distribution, it should be noted that 63% of the bonds have been placed with foreign investors, most notably from Germany and Holland. And there was also significant demand from Asian accounts, which together have taken up 10% of the total issue.

ICO is committed to using the funds raised by issuing social bonds to finance the projects of companies located in autonomous regions of Spain with a GDP below the national average.

To comply with its transparency commitment to investors, ICO distributes the impact report for transactions of this kind one year after their launch. The data relating to the 2015 and 2016 social impact bond issues is now available.  The funds raised by ICO with those transactions - €1.5 billion - have made it possible to finance the projects of more than 35,100 SMEs. That activity has made it possible to create or maintain more than 225,400 jobs.