The International Finance Facility for Immunisation (IFFIm) has held early discussions with banks to discuss launching its first Islamic bond, or sukuk, as it seeks to tap the region’s growing retail investor market.
“We’re definitely very interested, there’s no question about that,” said David Ferreira, managing director for innovative finance, Gavi Alliance. “We’ve been speaking to people, both commercial banks and the Islamic Development Bank, about it, and it’s just a question of finding the right time. It’s difficult, technically, but we’re certainly not ready to give up.”
IFFIm, which uses bonds to “front-load” future government aid donations pledged for life-saving vaccinations through Gavi, is also considering a dollar-denominated bond to tempt regional investors. Five of the six wealthy Gulf states peg their currencies to the dollar.
“In the short term, we are looking seriously at the possibility of issuing a traditional bond in the currency we expect to be appealing to investors in the region,” said Ferreira. “If we do issue a dollar-denominated bond, I suspect we will get quite a lot of buyers.”
IFFIm raised more than $3.7bn from 2006 to 2012 through bond programmes, capitalizing on $6.3bn of donor commitments from countries such as the UK, France and Italy. Its first bond in 2006 raised $1bn from institutions in London, and has been followed by further issuances in currencies such as yen, South African rand and Australian dollars.
The funds have enabled Gavi to almost double its spending on buying and delivering vaccines to the world’s poorest nations.
“I think the product we have been issuing so far, the currencies or structures, were perhaps not as appealing to investors [in the GCC],” said IFFIm chair Rene Karsenti.“If we can offer the right product, with a return equivalent to a high quality bond and which allows people to directly help an important cause, I think they will embrace it.”
Gavi in March signed an agreement with the Islamic Development Bank (IDB) to help accelerate the delivery of vaccines in Islamic countries.