Oct. 30, 2020, 4:12 p.m. EDT

This bond sale just raised $500 million to fund a COVID-19 vaccine program

By Jack Denton

A global vaccines alliance has raised $500 million through a COVID-19 vaccine bond sale to fund immunization programs in developing countries.

The money was raised for Gavi by the International Finance Facility for Immunization (IFFIm), the group’s financing vehicle, in a deal that attracted more than $1.5 billion in demand from investors in the oversubscribed offering.

Gavi is a public-private health partnership set up in 1999 with a $750 million donation from the Bill & Melinda Gates Foundation, which remains one of the group’s key partners. It is also backed by the United Nations, the World Health Organization, and the World Bank.

The bond, priced on Thursday, offers funding for Gavi’s core programs and efforts to develop and distribute an eventual vaccine for the SARS-CoV-2 coronavirus that causes COVID-19, with a focus on the world’s poorest countries.

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“As the world confronts a devastating pandemic, this latest Vaccine Bond issuance is giving Gavi the financing it needs to act quickly, boldly and flexibly,” said Cyrus Ardalan, the chair of IFFIm’s board. “These bonds enable private sector investors to directly contribute to a critical effort to address one of the biggest global challenges we face.”

The bonds have a three-year maturity and offer investors a semiannual coupon of 0.375%. Citi, Crédit Agricole, and TD Securities arranged the deal in global capital markets, where central banks and official institutions consisted of 60% of the order book. 

Asset managers, pension funds, and insurance funds made up 26% of orders, with banks, bank treasuries, and corporates comprising the rest of the orders.

“Against the backdrop of COVID-19, which has raised global awareness of the critical importance of vaccines and immunization, this transaction benefited from remarkable momentum,” said Paul Eustace, a managing director and head of the EMEA syndicate at TD Securities.

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IFFIm has disbursed approximately $3 billion to Gavi since its first bond issuance in 2006. This is the first offering since the group’s issuance of a $300 million three-year floating rate bond in 2017.

The bonds are backed by legally-binding pledges of long-term grant payments from sovereign donors. The World Bank acts as the group’s treasury manager.

Gavi is leading Covax, a global inoculation program ensuring equitable access to a potential COVID-19 vaccine. On Thursday, drug giants GlaxoSmithKline (LON:UK:GSK) and Sanofi (NAS:SNY) , which are jointly developing a candidate vaccine, announced they would provide 200 million doses to Covax.

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