Swedish Investors Back COVID19 Bond

    Stockholm (NordSIP) – According to reports from Alecta, Folksam and Länsförsäkringar the IFC issued a SEK3 billion social bond to provide financial support and loans to companies that are strongly adversely affected by the spread and turmoil linked to Covid-19.

    The IFC is a part of the World Bank that targets the private sector in developing countries. The bond is part of the World Bank’s commitment from early March to allocate up to US$ 14 billion to support both countries and private sector companies as a result of the virus outbreak.

    The three Swedish institutional investors seem to have been the only participants in this SEK-denominated transaction. Alecta was the single largest investor, purchasing SEK2 billion of the private placement. “Through this investment, we both help to counteract the negative effects of Covid-19 and to create security for companies and their employees. This type of investment in social bonds benefits both communities and our customers in the long term,” says Tony Persson, head of the interest and strategy group at Alecta.

    The Folksam Group invested SEK700 million in the bond. “We are excited about this opportunity through an investment in the fight against the negative effects of Covid -19 and create security for companies and their employees,” says Ylva Wessén, President and CEO of the Folksam Group. “The people’s first and biggest focus is always our customers. The Folksam group insures closer to each other in Swedish and it is a challenging time for all of us today. We do our utmost to make our customers and employees feel safe while helping to reduce the spread of the coronavirus.”

    Länsförsäkringar, for its part, invested SEK300 million. “The purpose of the bond is to support the work on managing the health and economic effects that result from the global virus outbreak caused by coronavirus,” says Kristofer Dreiman, head of responsible investments, Länsförsäkringar AB. “We want to support various actors and countries to take measures to minimize the tragic effects of Covid-19 as far as possible. In the long term, private capital can complement the public and help secure jobs and reduce the health and economic effects of the virus outbreak, says Kristofer Dreiman.”

    The IFC issued the bond under its social bond framework, and the funds are earmarked for social projects such as health care, education and financing for small businesses. The support goes to companies in developing countries so that they can continue to conduct their business and retain their employees. Companies in specific strategic sectors such as medical equipment and pharmaceuticals receive direct support to, among other things, ensure that supply chains can be maintained.

    Image by NIAID via Wikimedia Commons


    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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