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Vaccine Bonds: Invest and Save Lives

Gavi the Vaccine Alliance (Gavi) is a public-private partnership that was created as an alliance between the World Health Organization (WHO), UNICEF and the Bill & Melinda Gates Foundation among others, to provide vital vaccines to children in the poorest countries of the world. ((About Gavi, Gavi, (last visited Mar. 13, 2017).)) Since its inception, Gavi has helped immunize more than 580 million children in the world, preventing more than eight million deaths. ((Int’l Fin. Facility for Immunisation, IFFIm Resource Guide 11 (Jan. 2017).)) One of the ways that Gavi funds its programs is through “vaccine bonds”.

Vaccine bonds are a pioneering form of socially responsible investments (SRI), an investment discipline aimed at generating competitive returns while making a positive social impact. ((Id. at 7; SRI Basics, US SIF, (last visited Mar. 13, 2017).)) The vaccine bonds are investment grade-bonds supported by binding government monetary pledges to support Gavi’s programs. ((IFFIm, supra note 2, at 7.)) These bonds are issued by the International Finance Facility for Immunisation (IFFIm), and are sold in capital markets all over the world in several currencies. ((Id.)) They also have a maturity term averaging three to five years. ((Id.))

Vaccine bonds work like this: a donor country like the UK pledges to provide Gavi with £100 million over ten years by disbursing £1 million each year, these legally binding and irrevocable pledges are then used to issue bonds which investors purchase in exchange for future payments of the principle amount along with interest. ((Id. at 10.)) This process is called frontloading and it’s a win–win situation for all involved. ((Id.)) Investors get a competitive financial return while creating positive societal impact, and Gavi gets to immunise more children in a shorter amount of time. ((See Edmund Tadros, Vaccine Bonds for a Healthy Return on Saving Lives, Fin. Rev. (Mar. 31, 2015),

The World Bank, another partner member of Gavi and IFFIm’s Treasury Manager, takes every precaution to ensure IFFIm’s high credit rating, making the bonds more appealing to investors. Since Gavi receives pledges from multiple donors in different currencies, to avoid risk from fluctuating foreign exchange rates IFFIm swaps all its assets and liabilities into U.S. dollars with the World Bank. ((IFFIm, supra note 2, at 8.)) This allows IFFIm to raise funds on better terms. It also provides flexibility to Gavi, allowing it to use the funds when they are needed the most. ((Id. at 10.)) And because of the funds predictability, Gavi can engage vaccine manufacturers to lower vaccine prices. ((Id.))

Vaccine bonds, are one of the first highly rated SRI bonds. They have been issued in the U.S., Australia, Japan, UK and as sukuks in the Islamic Financial Market. ((Id. at 7.)) This bond model has been so successful that at the United Nation’s Third International Conference on Financing for Development in Addis Ababa, the international community called for its use in other global development goals. ((Id. at 12; U.N. Dep’t of Econ. & Social Affairs, Fin. Dev. Office, Addis Ababa Action Agenda 32-33 (July 2015), IFFIm has also received numerous awards and recognitions for its innovations, ((See IFFIm, supra note 2, at 12.)) including Islamic Finance News’ 2014 Social Impact Deal of the Year and Global Finance magazine’s Islamic Deal of the Year in 2015. ((Islamic Fin. News, Special Awards Report 34 (Mar. 2015), Finance Names the World’s Best Islamic Financial Institutions 2015, Global Fin. (April 8, 2015),


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Pablo Remirez de Eztenoz

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