Client Alert: International Fund for Agricultural Development, a UN specialised agency, lists sustainable bonds on London Stock Exchange

On 21 November 2023, the International Fund for Agricultural Development (“IFAD”), a specialised agency of the United Nations, listed sustainable bonds on the London Stock Exchange (“LSE”). By doing so, IFAD demonstrated its ability to use complex and innovative financing structures to pursue its fundamental purpose: the alleviation of global hunger. Adding to its achievement, IFAD also presented its first impact report which outlines how IFAD invested the proceeds of IFAD bonds issued in 2022.

IFAD is an international financial institution and a specialised agency of the UN. IFAD has the specific mandate to eradicate poverty and hunger by investing in rural people. Since its establishment in 1977, IFAD has achieved excellent results and has provided USD 23.2 billion in such grants and low-interest loans and has increased the income for 77.4 million people by at least ten per cent while improving market access for 64.4 million people by at least 20 per cent.

IFAD first issued sustainable bonds in 2022, after obtaining two AA+ (with a stable outlook) credit ratings from Fitch and Standard & Poor’s in 2020. By listing bonds on the LSE, IFAD might obtain access to new and more financial resources so as to fulfil its mission – and also “channel more resources to vulnerable rural populations in low- and middle-income countries.” IFAD bonds will mature in June 2038 and are currently only open to professional investors.

According to the IFAD’s Sustainable Development Finance Framework, the proceeds raised through the placement of IFAD sustainable bonds will be used to (re)finance development projects and programmes in 93 member countries. Furthermore, IFAD’s first impact report provides information on the expected portfolio results, including reaching close to two million estimated households. The impact report also showcases the remarkable growth of IFAD with the average project size growing to USD 73 million in 2019 – 2021.

The last time a UN-affiliated international organisation listed its bonds on the LSE was in 2014, when the International Finance Corporation, which is part of the World Bank Group, did so.

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