World’s largest social bonds support EU COVID-19 response

The EU has issued €17bn in social bonds to help finance member states' programmes on employment support in the midst of the ongoing Covid-19 pandemic.

The continuing impacts of the Covid-19 pandemic stretch far beyond the healthcare crisis, having secondary effects including employment hardship and economic uncertainty for many individuals, communities, companies and countries. In order to support the citizens of EU countries in need by managing supplementing incomes and mitigating unemployment risks including associated healthcare needs, the European Commission created the SURE Programme (“Support to mitigate Unemployment Risks in an Emergency”).

As part of the €100bn programme, the EU has issued the world’s largest social bonds and largest ever syndicated Euro deal – a €17bn transaction aimed at financing measures needed by Member States to preserve the income of employees at firms experiencing substantial negative impacts of the COVID-19 outbreak, and of self-employed individuals experiencing difficulty. The bonds’ use of proceeds specifically contribute to the following social impact areas:

  • SDG8 – Target employment generation and programs designed to prevent and/or alleviate unemployment
  • SDG3 – Good health and wellbeing through increasing access to towards universal health coverage, including financial risk protection, and affordable essential medicines.

The bonds are aligned to the Social Bond Principles administered by ICMA, and have been reviewed by Sustainalytics who provided a Second Party Opinion. Reporting requirements are robust and transparent, and will be done on a six monthly basis to guarantee funds will be used for social purposes as per the SURE Programme.

The inherent transparency provided by social bonds through targeted use of proceeds and measureable impact reporting, outlined in the social bond framework, is a significant differentiator of this €17bn financing by the European Union. The 10 year tranche at €145bn was 14 times oversubscribed, and the 20 year tranche at €88bn was 12 times oversubscribed; evidencing both growing investor demand for social bonds and the role sustainable capital markets can play in supporting society to combat social challenges.

BNP Paribas’ leadership in the social bond market in response to Covid-19