ICO launches its tenth social bond issue amounting to 500 million euro

28 June 2023

  • ICO strengthens its position in the market, of which it is a pioneer in Spain, with an issued volume of 5,05 billion euro
  • Social bond issues have helped to finance more than 69,000 business projects that promote social cohesion and generate positive employment impact
  • The issue closed today was very well received by international investors, who bought 75% of the issue, which shows the interest of the investor base in ICO bonds

The Instituto de Crédito Oficial (ICO) (A/Baa1/A-/A from S&P/Moody's/Fitch/DBRS) has launched its tenth social bond issue, amounting to 500 million euro and maturing on 31 October 2028, thereby consolidating its position in the market for this type of operation, in which it is a pioneer in Spain.

The funds raised with this operation will be used to finance projects by the self-employed, SMEs and Spanish companies that generate a positive social impact and boost job creation, in line with the objectives of the Recovery, Transformation and Resilience Plan.

With today's transaction, the volume of funds raised in the social bond market by ICO issues amounts to 5.05 billion euro. In public-private partnerships, these funds have so far helped to finance more than 69,000 business projects, which have helped to create or maintain more than 444,000 jobs, as well as the construction of social infrastructure such as hospitals and housing.

High demand from international investors

The demand generated by the operation shows the confidence of the investor base in the role of the ICO. 75% of the operation has been placed between international accounts, highlighting the demand from Germany and France.

The order book has registered purchase requests from investors amounting to more than 2.2 billion euro. This oversubscription has allowed the operation to close with a spread of 15 basis points over the Treasury reference for the same maturity, narrowing the starting price that had been set at reference of 20 basis points. 

In the distribution by type of investor, fund managers accounted for 37% of the total volume of the issue, followed by banks (25%), insurance companies and pension funds (22%), and central banks and official institutions (13%) 

The transaction, led by BBVA, Credit Agricole, HSBC, Santander and Unicredit, carries a coupon of 3.25% and is listed on BME's AIAF fixed income market. 

ICO’s sustainable bonds

With social bond issues, the ICO is committed to investors to promote projects that generate a positive social impact, channelling the funds raised through these operations to the business sector through its direct financing programmes, the ICO Mediation Lines and funds managed by AXIS, its venture capital subsidiary.

ICO has been a pioneer and a reference in the social bond market, being the first Spanish public issuer to launch an operation of this type in 2015. It is also a promoter of the social bond reference frameworks of the International Capital Market Association (ICMA) and is a member of the Advisory Council of the GBP and SBP Executive Committee.

The ICO's activity in the sustainable bond market is complemented by green bonds to raise funds to finance projects that boost the green transition. In total, the ICO has already launched 15 sustainable operations (10 social and 5 green), with a total amount issued of 7.55 billion euro.