Guarantee SDG-bond health, fin. inclusion, environment, cl change, agriculture

Danske Bank has a large investor network that has shown a growing interest in socially and environmentally sustainable investments, which has resulted in contact with the Swiss asset manager responsAbility Investment AG (responsAbility or rA) which has experience in financing projects in renewable energy, agriculture and financial inclusion in both middle- and low-income countries. Danske Bank and responsAbility have subsequently held discussions with Sida about the possibilities for a guarantee effort that aims to enable commercial investments in a number of countries for projects with a social focus based on the agreed global sustainability goals for water and sanitation, energy, sexual and reproductive health and rights (SRHR), agriculture and financial services with links to a general overall performance goal of improved health in line with Agenda 2030. responsAbility, which has extensive experience of investments in various projects, will act as an asset manager for the proposed guarantee effort and thus decide on which investments to various projects that are to be implemented in accordance with the criteria that will be included in the guarantee agreement between Sida and responsAbility. Danske Bank's role will be to attract commercial investors to provide investment capital through the purchase of social bonds from the fund that will be established for the lending operations themselves, and to contribute to a structure for the effort together with Sida and responsAbility. Without a guarantee where investors' credit risk is reduced, it will not be possible to attract commercial capital in the order of magnitude sought, which in this case is estimated to be approximately SEK 1.5 billion.The purpose of the guarantee effort is to provide an opportunity for responsAbility to lend money to more microfinance institutions as well as small and medium-sized companies than would otherwise be possible. The effort is structured so that certain loans can run for up to four years and the financial resources available to responsAbility can be lent again. This means that the insert has a revolving structure. Sida believes that a revolving structure enables a strengthening of possible development effects and that there is a potential to show the way for other investors.The expected effect of the effort is that the various loans through the planned fund to companies and microfinance institutions in low- and middle-income countries in mainly Africa, Latin America and Central, South and Southeast Asia, will contribute to improved living conditions and improved health and quality of life for women, men and children living in poverty, or alternatively belong to the lower income strata. Thus, people are given opportunities to also contribute to economic development through the mobilization of capital for lending via, among other things, microfinance institutions to both households and various companies for activities related to the global development goals. The projects will be financed through the funds that investors invest in the fund through the purchase of bonds. Lending to the projects takes place by the fund manager, responsAbility, assessing various projects on the basis of relevance-specific and financial criteria. Payment to the various borrowers will be made from the fund only after responsAbility has signed a loan agreement with the borrower concerned.The collaboration is initially expected to lead to responsAbility being able to issue just over 30 loans to various projects that are not currently pre-decided. As the fund has a revolving nature, the fund is estimated to issue a total of approximately 40-45 loans over the entire term. The average term of the loans will be 40 months and the average loan amount will be approximately USD 4,400,000. The warranty period is 6 years after the startingdate.