Bond to fund vaccines in poor countries takes to the road
Source: Reuters
By Christina Fincher LONDON, Oct 2 (Reuters) - Six European countries plan to raise up to $1 billion in the international bond markets next week to buy life-saving vaccines for millions of children in the world's poorest countries. Bankers will kick off a series of roadshows to drum up investor interest in the scheme -- championed by British finance minister Gordon Brown -- first in the United States and then in Europe ahead of a likely launch on Oct 12. The scheme is a pilot for a wider bond financing project that could double rich countries' development aid to $100 billion a year but which has failed to get the backing of the United States. Funds raised will support immunisation projects against killer diseases such as measles and polio in 70 of the world's poorest countries. "The benefit of this concept is that it allows development bodies to front-load resources," said Christopher Egerton-Warburton, executive director at Goldman Sachs which is managing the sale along with Deutsche Bank. "With immunisation, there is clearly work that needs to be done today." The International Finance Facility for Immunisation will be managed by the World Bank and receive funding from Britain, France, Italy, Spain, Sweden, and Norway. Brazil and South Africa have pledged to join at a later date. Next week's offering is only the first leg of the initiative which aims to raise $4 billion in the bond markets over the next 10 years. SHAPE OF THINGS TO COME? Britain's Brown has long campaigned for the creation of a broader International Finance Facility to help meet the Millennium Development Goals on sharply reducing child mortality. But the plan -- which uses rich countries' aid pledges as collateral for cash in the present -- has run into opposition, particularly from the U.S. which does not want to make commitments under one administration that must be passed on to the next. Some lobby groups and aid agencies have also expressed concern that the scheme relies on future aid commitments and could pose problems further down the line. Bankers involved in the deal, nevertheless, are expecting a warm response. "Preliminary investor feedback has been very enthusiastic," said Doris Herrera-Pol, head of capital markets at the World Bank in Washington. Microsoft Chairman Bill Gates has also welcomed the bond initiative and his Gates Foundation has contributed $750 million to the vaccination project. Investor presentations will be held in New York on Tuesday and on the U.S. West Coast later this week, according to banking sources. The European leg of the roadshow will kick off in Switzerland on Monday, move to Frankfurt on Tuesday, Paris on Wednesday and London on Thursday. The bonds will have a top-notch triple A credit rating and are expected to carry a four- or five-year maturity. Final terms and conditions will depend on investor feedback and market conditions.
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