Tuesday, August 04, 2020

Bank of Ayudhya to issue region’s first ‘gender’ bond

Aug 23. 2019
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By The Nation

IFC, a member of the World Bank Group, and DEG (Deutsche Investitions und Entwicklungsgesellschaft) have agreed to subscribe the Women Entrepreneurs Bonds to be issued by Bank of Ayudhya in the amount of up to US$220 million. 

The pioneering investment is supported by the Women Entrepreneurs Opportunity Facility, a joint initiative of IFC and Goldman Sachs 10,000 Women, to expand access to capital for women entrepreneurs globally. 

The aim of this offering is to boost lending to women-led small and medium-sized enterprises (WSMEs) in Thailand.

Bank of Ayudhya (Krungsri) expects to issue the bonds to IFC and DEG in October. Their subscriptions will be up to $150 million and $70 million, respectively. MUFG Securities Asia Ltd is the sole social-bond structuring adviser, arranger and placement agent.

This will be the first private-sector “gender” bond issuance in the Asia-Pacific region and the first social bond issuance in Asian emerging markets in compliance with the International Capital Markets Association Social Bond Principles and the Asean Social Bond Standards.

“Krungsri holds strong to our conviction in continuing to grow our business, while fulfilling the broader goal of financial inclusion for the underserved, including the WSME segment,” said Seiichiro Akita, Krungsri’s President and CEO. 

“This issuance reaffirms our commitment to corporate citizenship practices and our broader ambition to meet the UN Sustainable Development Goals.”

More than half of the SMEs in Thailand, and especially those owned by women, lack adequate access to finance. The finance gap for WSMEs in the country is estimated to be $25 billion, accounting for 61 per cent of the overall micro and SME finance gap in Thailand.

“Sustainability is an important agenda for MUFG,” noted Augusto King, co-head of Debt Capital Markets Loans and Bonds Asia Pacific at MUFG. “This issuance will give women entrepreneurs across Thailand the chance to take their businesses to the next level and unleash fresh growth impetus in the country.”

This inaugural certified social bond issuance will help expand credit lines to WSMEs and promote the transparency and integrity of Asia’s nascent social bond market.

“The transaction demonstrates DEG’s commitment to promoting greater participation of women in the Thai economy to raise productivity, boost the living standards of families, and foster social cohesion,” said Monika Beck, a member of DEG’s Management Board.

Social bonds raise funds for projects that help improve social outcomes. This novel asset class provides investors with an attractive investment proposition as well as an opportunity to support projects with positive social impact.

Krungsri’s Women Entrepreneurs Bonds will introduce WSME loans as an attractive asset class for investors and pave the way for the issuance of future capital markets instruments that benefit socially-responsible initiatives in Thailand and the region. Through this offshore bond issuance, Krungsri will become a pioneer of women’s financing in Thailand.

“We are focused on closing gaps in access to finance and education for women entrepreneurs. That is why we support innovative capital solutions such as the first private-sector gender bond in the region,” said Cristina Shapiro, Global Director of 10,000 Women. 

“Goldman Sachs research shows that closing the credit gap for women-owned SMEs in emerging markets could push income per capita an average of 12 per cent higher by 2030. Women entrepreneurs have real potential to impact Thailand’s future growth.”

“Instruments like the Women Entrepreneurs Bonds will allow investors to experience what IFC has observed for years – namely, that women entrepreneurs are a source of growth and sustainability for banks, communities, and countries,” said Philippe Le Houérou, the Chief Executive Officer of IFC. “Investing in women can improve the lives of families and drive business, thereby ensuring Thailand’s growth trajectory is inclusive and sustainable.”

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