ICO is launching a public social bonds issue amounting to 500 million € that will contribute to alleviating the social and economic impact of COVID19

08 May 2020

  • 67% of the transaction has been placed among foreign investors.
  • ith this operation, ICO becomes the first Spanish issuer to launch a public social bond issue designed to alleviate the economic impact of COVID-19.
  • The operation closed today is the eighth sustainable bond issue (seven social and one green), which positions ICO among the leaders in this market at the European level with a volume issued of over 4,050 million euros.

Instituto de Crédito Oficial (with rating A/Baa1/A-/A of S&P/Moody's/Fitch/DBRS) has launched a social bond issue in the amount of 500 million euros to finance the operations of the self-employed, SMEs and companies that contribute to alleviating the social and economic impact of the COVID-19 pandemic.

The issue, directed by BNP, HSBC, Santander, and Société Générale, has a term of four years and a return to the investor of 0.259%.

The transaction has recorded the highest over-subscription for an ICO bond operation, with a demand of over 3,500 million euros, which is more than 7 times the issue amount. It should be noted that 64% of the issue was placed among socially responsible investors (SRI). This highlights the investors' interest in this type of issues, in which ICO is an international reference, and the sensitivity of the financial markets to the current health crisis with global repercussions.

The issue opened at a starting price of +19 basis points above the Treasury's benchmark at the same term (4 years). The high demand generated by investors allowed the operation to close with a spread of +14 basis points over the Treasury¿s benchmark.

In terms of the geographical distribution, it should be noted that 67% of the bonds were placed among foreign investors, including those from France, Asia and the Middle East, German and the Nordic countries.

Regarding the distribution by type of investor, it is worth noting the demand registered by fund managers, who acquired 33% of the total volume of the issue, followed by insurers with 24%, central banks and official institutions (23%) and banks (20%).

The funds collected with this issue will allow ICO to finance operations of Spanish self-employed, SMEs and companies aimed at alleviating the economic and social impact of COVID-19, through the various instruments available: Second-floor facilities, direct financing programmes and the funds managed by AXIS, its venture capital subsidiary.

The operation closed today is a further demonstration of ICO's commitment to the development of sustainable issues markets, becoming the first Spanish issuer to launch a public social bond issue aimed at alleviating the effects of COVID-19.

ICO, reference issuer in sustainable bonds

ICO has carried out seven sustainable bond issues and one green bond issue in 2019 for an amount of 500 million euros, consolidating its position as one of the reference issuers in Europe in the sustainable transactions market with 4,050 million euros issued.

In April 2020, ICO updated the framework for issuing social bonds to expand its scope. The updated framework allows ICO to go a step further by focusing on other categories and other social and economic needs.

Impact of ICO social bonds

In accordance with the commitment to transparency made to investors, ICO distributes an impact report one year after the launch of the social bond issues. With the funds raised in the first five ICO social bond issues, the Institute has been able to finance more than 53,600 projects by micro-companies and SME that have generated and/or maintained over 347,000 jobs.