To combat the corona pandemic and its socio-economic impact, APG on behalf of its pension fund clients has invested nearly € 90 million in Covid-19 response bonds. The proceeds of these ‘corona bonds’ are used, among other things, to finance emergency health measures and support packages for small and medium-sized enterprises.
Since late March, APG – on behalf of ABP, bpfBOUW, SPW and PPF APG – has participated in the issue of corona bonds by the Nordic Investment Bank (€16 million), European Investment Bank (€39 million) and Council of Europe Development Bank (€34 million). In all three cases, investor demand considerably exceeded the amount of the issue.
The proceeds of corona bonds are earmarked for financing of a range of emergency measures, including expansion of healthcare services, support to small and medium-sized enterprises (SME’s), and a temporary increase in social security expenditures. In some cases, corona bonds also provide for financial help to local governments and medical equipment and healthcare companies facing unprecedented demand due to the pandemic.
All three bonds are issued by reputable institutions rated AAA, the highest credit rating. The credit risk associated with these bonds is comparable to the risk of Dutch sovereign bonds, while the coupon rate is slightly higher compared to similar bonds.
It is a good that institutions issue special corona bonds, says Oscar Jansen, Credit specialist at APG Asset Management. “The societal and economic impact of the virus is huge and a lot of money is needed to fight the crisis. As a responsible investor, we want to play an active role in this.”
APG is one of the world’s largest green bond investors. These are bonds issued by companies or (semi-) governments to finance green, social or sustainable projects. By the end of 2019, we had invested over €9 billion in green, sustainable and social bonds. These investments also contribute to our clients’ ambitions in the area of sustainable investment, in particular the aims of ABP (20% of AUM in the Sustainable Development Goals by 2025) and bpfBOUW (€12 million by the end of 2020).