IFAD enters the Australian Dollar market, issuing AUD 75 million sustainable bond to investor Meiji Yasuda Life

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©IFAD/Imani Nsamila

The International Fund for Agricultural Development (IFAD) issued its first Australian Dollar (AUD) private placement today, setting yet another milestone as an issuer of sustainable bonds in international markets and broadening its issuance currency pool. The investor, Meiji Yasuda Life, one of the leading life insurers in Japan, bought a fifteen-year AUD 75 million sustainable bond to support IFAD in its mission to accelerate sustainable growth and inclusive development in rural areas of developing countries.

With this bond issuance, IFAD reaches 75 per cent of its 2024 funding plan. 2024 is the last year to capture funding for IFAD’s 12th Replenishment cycle, with IFAD aiming to reach an investment program of up to US$3.4 billion for rural areas, tackling poverty, hunger, and climate change in more than 90 countries for the 2022-2024 period.

“This new deal signals another step to position IFAD in the capital markets by entering the AUD market,” said Natalia Toschi, Head of Funding, IFAD. “IFAD is excited to partner yet again with a like-minded institution. Meiji Yasuda Life’s Group Sustainability Policy works towards a sustainable and just society, creating shared value that extends to future generations. This is what IFAD strives to do for the rural populations it invests in.”

The bond proceeds will support small-scale farmers to grow their production, build their resilience to climate and economic shocks and access markets and value chains to improve their incomes and economic stability. This will be achieved by building capacities in best agricultural practices including soil and water management, agroecology, sustainable livestock management, and ensuring access to technologies such as irrigation or solar energy. IFAD also supports access to financial services and small loans in remote rural areas which are essential to help farmers invest and grow their businesses.

“Meiji Yasuda Life Insurance Company has positioned ‘Prolong healthy life expectancy’ as one of its priorities among the social issues related to the Sustainable Development Goals. This time, we have invested in the bond issued by IFAD, whose mandate is to improve livelihoods and boost food security for people living in rural areas. This investment is highly relevant to our priorities, and we support IFAD’s mandate,” says Yoshimasa Osaki, Managing Executive Officer, Meiji Yasuda Life.

Founded in 1881, Meiji Yasuda Life Insurance Company is a mutual insurance company incorporated in Tokyo. “In line with its management philosophy ‘Peace of mind, forever’, the company, as a responsible institutional investor, aims to secure steady income to maintain its ability to continue the payout of policyholder dividends while promoting ESG investment and financing to contribute to the SDGs,” added Osaki.

After obtaining two AA+ credit ratings in 2020, IFAD issued its first sustainable bond in June 2022 as part of a strategy to explore new funding models and to channel more resources to vulnerable populations in low- and middle-income countries and finance its mission to lift rural people out of poverty and hunger and adapt to climate change.

With the issuance of its first bonds, IFAD became the first United Nations Fund and the only UN body and specialized agency other than the World Bank Group to operate on capital markets.

About 3 billion people live in the rural areas of developing countries and rely to a significant extent on small-scale farming for their food and livelihoods. Small-scale farmers produce one-third of the world’s food. While being essential for global food security, they are on the frontline of climate change and often live in poverty and hunger. About 80 per cent of the world’s extremely poor people reside in rural areas.

The number of people suffering from hunger has been growing in recent years and reached up to 780 million people in 2022.