An innovative bond aimed at financing child immunisation in some of the world's poorest countries on Tuesday raised $1bn after attracting demand from a wide range of investors, including central banks, religious groups and rock stars.

The new bond, issued by the International Finance Facility for Immunisation (IFFIm), allows vaccination and immunisation schemes to go ahead immediately with investors' money, which will be repaid in the future by government aid payments.

The five-year AAA-rated bond has a 5 per cent annual coupon and was priced on Tuesday to yield a premium of 31 basis points over the five-year US Treasury bond, the lower end of the initial price guidance set on Monday of between 30bp and 33bp over US Treasuries.

The inaugural bond, which met about $1.75bn worth of demand, is expected tothe first in a series of issues aimed at raising about $4bn over the next 10 years.

Alan Gillespie, chairman of IFFIm, said on Tuesday: "The bond has caught the market's imagination and it paves the way forward. I would expect us to be back in the market in about a year's time."

The money will be used to strengthen health systems and boost the uptake of existing and innovative vaccines for children via the Gavi Alliance (formerly the Global Alliance for Vaccines and Immunisation).

The UK, France, Italy, Spain, Sweden, Norway, Brazil and South Africa, together with the Bill and Melinda Gates Foundation have pledged future years' development assistance.

Thirty-five per cent of the bond issued on Tuesday was taken up by central banks and official institutions, 25 per cent by fund managers, 23 by pension funds, 8 per cent by retail investors, 6 per cent by banks and the remainder with corporations and insurance companies.

Gordon Brown, the UK chancellor, who has championed the scheme, marked the event with a ceremony on Tuesday.

The UK Treasury said Bono, the rock star, and Bob Geldof, the anti-poverty campaigner would buy bonds. It also said that Pope Benedict XVI, the Archbishop of Canterbury, the Chief Rabbi, the Muslim Council of Britain, the Hindu Forum of Britain and the Network of Sikh Organisations had agreed to buy bonds.

Goldman Sachs began helping to structure the bond in 2002 and advised the UK Treasury, which came up with the idea.

Goldman Sachs acted as financial adviser on a pro-bono basis but it and Deutsche will collect standard fees for the bond sale, which amount to 0.1 per cent of the amount raised, or about $1m.

  Add comment

Name:
E-Mail:
Comment:
Enter code: