CABEI Bond combats social disparity

Impact bonds |

Praxis invests $1.2 million in support of UN Sustainable Development Goals

Investors, companies, financial institutions, and nonprofit organizations increasingly have begun aligning themselves with the United Nations Sustainable Development Goals (UN SDGs) established in 2015 to meet critical development targets at a global level. Praxis Mutual Funds® included a guide to UN SDG alignment in its investing activities in its inaugural 2020 Real Impact Report, released in January 2021.

The Central American Bank for Economic Integration (CABEI) issued its first global social bond in February 2021 after publishing its social bond framework in December 2020. CABEI received accreditation on its framework from Sustainalytics, an organization that confirms social bond issuers alignment with the Social Bond Principles.

The five-year social bond issued by CABEI is rated Aa31/AA2 and it raised U.S.$500 million at a 1.14% coupon rate. CABEI reported that demand for the bond was 2.4 times the amount issued (U.S. $1.2 billion). Praxis Mutual Funds purchased $1.2 million of the bond on Feb. 3, 2021, joining central banks, supranational institutions, investment funds, and other organizations from Asia, North America, and the Middle East.

UN SDGs

UN SDGs

With this bond, CABEI aims to deepen the bank’s commitment to combat social disparity and contribute to the socioeconomic development of the Central American region. This particular social bond is aligned with its social bond framework and the UN SDGs. This bond meets goals of empowering women and developing basic infrastructure such as essential health services, social housing, and clean drinking water. The bond impacts UN SDG Goal 1 (no poverty), Goal 5 (gender inclusivity), Goal 6 (clean water and sanitation), Goal 10 (reduced inequalities), and Goal 11 (sustainable cities and communities).

Through positive impact bonds, Praxis Mutual Funds seeks to include investments that both generate a competitive financial return and deliver a clear and direct benefit to people and our planet. Investors participating in the Praxis Impact Bond Fund have the chance to actively live out their roles as global citizens.

The Praxis Impact Bond Fund makes a positive impact through stewardship investing, a values-based approach to socially responsible investing that incorporates:

  • Values-based restrictive screens and active ESG data integration.
  • Change-oriented corporate engagement.
  • Positive impact bond investments benefiting the climate and communities.
  • One percent of the fund assets committed to community development investing.

Learn more about the Praxis Impact Bond Fund here


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Author

Khampha Stempel
Praxis Investment Services Intern

Praxis Impact Bond Fund

At Praxis, our investments generate a competitive financial return and deliver a clear and direct benefit to people and our planet.

 

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Disclosure

As of April 30, 2021, the Praxis Impact Bond Fund has invested 0.16% of its assets in the Central American Bank for Economic Integration social bond. Fund holdings are subject to change. To obtain holdings as of the most previous quarter, visit praxismutualfunds.com.

1 In the Moody's ratings system, securities are assigned a rating expressed in letters from Aaa to C, with Aaa being the highest quality and C the lowest quality.

2 In the S&P ratings system, securities are assigned a rating expressed in letters from AAA to D, with AAA being the highest quality and D the lowest quality.