The Technical Cooperation (TC) project (the “Project”) is taking place within the Capital Market Development (“CMD” or former “LC2”) Team of the European Bank for Reconstruction and Development (the “EBRD” or the “Bank”). The Project will be carried out in conjunction with the Gender & Economic Inclusion (G&EI) Team, the SME F&D (Finance & Development) Team, the Environment and Sustainability Department (ESD) and the Financial Institutions (FI) Team.
The overall strategic objective of LC2 is to promote more efficient and self-sustaining financial markets in EBRD’s Countries of Operation (COOs or EBRD region) through the development of local capital markets and the broader use of local currency, in order to contribute to economic progress and build a more stable financial environment. The LC2 Strategy 2019-2024 (the “LC2 Strategy”) has identified as operational target areas, among others, “Improving Capital Markets Infrastructure” and “Expanding Product Range and Investor Base”.
Among many other social ills facing mankind at present, the global COVID-19 outbreak is the predominant issue threatening the well-being of the world’s population, especially those most vulnerable (including the youth, the elderly, those with underlying health conditions, the unemployed, women, and micro-, small- and medium-sized enterprises). As a Multilateral Development Bank (MDB) with a strong private sector mandate, the EBRD is in a unique position to tackle the economic fallout of the pandemic in EBRD’s COOs and to use this unprecedented opportunity to promote and help the Bank’s clients make use of innovative financing mechanisms, including Social Bonds.
The EBRD has been and is issuing Social Bonds, namely Microfinance Bonds against the Bank’s MSME loan portfolio since 2010, and Health Bonds against the Bank’s loans to hospital, medical and pharmaceutical projects since 2018. The Bank has also contributed – together with other issuers, investors and underwriters – to establishing voluntary market standards and best practice guidance for Social Bonds as a member of the Executive Committee of the Social Bond Principles (SBP) under the International Capital Markets Association (ICMA) coordination. The SBP are voluntary process guidelines that recommend transparency for issuers that investors and other market participants can use to understand the characteristics of any given social bond. It also gives guidance to an issuer in defining and selecting a social project, by advocating transparency on the specific social issues and/or positive social outcomes for a target population (such as underserved or vulnerable groups) that the projects are designed to achieve.
While the Social Bond market is relatively nascent, rapidly increasing issuance of and investment into Social Bonds show that market players are highly interested in the instrument. On the 11th of March 2020, the IFC issued a USD 1 billion Social Bond dedicated to address the COVID-19 outbreak, which has been followed by a number of other Social Bond issuances aimed at addressing and alleviating the wide ranging social impacts resulting from the COVID-19 outbreak.
Against this context, the EBRD wishes to engage a firm (the “Consultant”) to perform a market review of Social Bonds and produce an in-depth analysis of eligible social projects, including both related and not related to COVID-19, that could fit within EBRD’s mandate, provide recommendations for (i) key target countries in the EBRD Region with the highest potential for Social Bond issuance; (ii) best market practice for each of the pillars of the SBP based on historical issuances reviewed as part of the report, including for eligible social project categories; and identify (iii) EBRD client(s) that could issue Social Bonds.
The overall objective of this Project is to support EBRD clients in its COOs to mitigate social issues, including those related to COVID-19, by mapping the opportunity to issue Social Bonds (with possible EBRD investment), as well as identifying what types of projects could be considered “social” for the purpose of the issuance of Social Bonds.
The specific objectives of the Project are to:
- Perform a Social Bond Market Review of Social Bonds issued by Financial Institutions in 1) the EBRD Region and 2) selected EU countries (up to 6 countries). The EU countries will be decided upon by the consultant in consultation with the OL.
- Map key social project eligibility criteria of the EBRD’s Environmental and Social Policy (ESP), the Economic Inclusion Strategy (EIS) and the Strategy for the Promotion of Gender Equality (SPGE) (together the “EBRD Policies”);
- Produce a due diligence checklist for bankers to be able to 1) assess EBRD clients’ readiness for the issuance of Social Bonds and 2) help provide input, as relevant, on the development of Social Bond Frameworks of issuers; and
- Conclude on key incentives and barriers for Financial Institutions to issuing Social Bonds in the EBRD Region (all COOs) and identify key markets and/or clients with strong issuance potential.
SCOPE OF SERVICES
In order to achieve the objectives outlined above, the Consultant will be required to, under the supervision and guidance of the EBRD’s Operation Leader (OL) (and/or any other person authorised by the OL), carry out the following activities:
- Social Bond Market Review:
- Produce a Market Review of Social Bonds issued by Financial Institutions in 1) the EBRD Region and 2) selected EU countries (up to 6 countries).
- Mapping of key social project eligibility criteria
- Building on the findings of the Social Bond Market Review, provide a detailed understanding of key features of the issuances mapped against the pillars of the
- ICMA SBP, with particular focus on eligibility criteria of social projects, target beneficiaries and impact reporting;
- Organise in-depth work meetings with the EBRD, in particular the ESD, Economics, Policy and Governance (EPG), FI and Treasury (Client Services) Departments, to understand key requirements and/or restrictions for EBRD to finance social projects. This is to be discussed against the particular context of existing EBRD Policies. The Consultant will work closely with the EBRD and dedicated advisers in the above mentioned Departments;
- Map key social project eligibility criteria of the EBRD’s Environmental and Social Policy (ESP), the Economic Inclusion Strategy (EIS) and the Strategy for the Promotion of Gender Equality (SPGE).
- Preparation of an Analysis Paper;
- Produce an Analysis Paper which will include the following components, based on in‑depth research conducted by the Consultant:
- Map the availability of social assets in the partner banks’ loan portfolio and derive from that the potential for future issuance;
- Create a due diligence checklist for bankers in terms of assessing EBRD clients’ readiness for the issuance of Social Bonds. This would then guide any origination and due diligence efforts at the Bank;
- Provide the narrative for the transition impact story of Social Bonds within relevant EBRD transition qualities;
- Detail the local and international investors environment supporting Social Bonds in the EBRD Region and selected EU countries; and
- Investigate incentives and barriers to issuing Social Bonds in the EBRD Region and selected EU countries.
The outcome of the Analysis Paper could pave the way for the potential issuance of Social Bond(s) by EBRD client(s) and further investment by the Bank.
- Awareness Raising Event
- Organise a Social Bond workshop in London, the United Kingdom, or – in case the Coronavirus pandemic does not allow the organisation of a physical event – a Social Bond webinar via online platform to raise awareness of Social Bonds. The event will target Financial Institutions from the EBRD regions, ESG investors, and other MDBs/IFIs.
Set up the agenda for the event;
- Design and release the event banner and invites, as well as advertise the event through available social media and media outlets;
- Arrange the logistics of the event (day, agenda, location, etc.) and coordinate the invitation list;
Conduct any other preparatory work for the event, as required.
- General: To ensure that critical milestones are being met, disbursement of funds will be phased and contingent upon certain implementation criteria being satisfied. Management structure and Project oversight: The Consultants shall carry out the tasks stated herein through coordination and management provided by the Bank’s OL and any other person explicitly authorised by the OL.
- Project start and duration: The Project is expected to start in Q1 2021. Subject to the situation regarding the Coronavirus pandemic at the time of Project start, it may be required that the Project is kick-started online. At all times the Project will be guided by the latest international, local, and EBRD guidelines regarding travel. The total Project duration is 6 months.
- Project language: Project language is English. All deliverables are to be delivered in English, unless otherwise explicitly agreed between the EBRD and the Consultant.
- Other: The Consultant should not expect EBRD to provide logistical support and, therefore, it is expected to provide its own office, communications, interpretation/translation, and other assignment-related logistical support.
The Consultant will be a firm with previous project experience on capital markets and innovative financing mechanisms, specialising in Social Bonds.
The Project expert team is expected to include a Senior Expert (or pool of experts) – the “Key Expert(s).
The Senior Expert will have the following qualifications:
- Preferably at least 7+ years of Capital Markets Experience;
- In-depth knowledge of Social Bonds, as well as Green and Sustainability Bonds is a requirement;
- Expertise in producing Market Reviews and Analysis Papers for similar capital markets instruments;
- Proven track record of working on similar projects and ideally experience in framing solutions for issuance of financial instruments;
- Proven knowledge of capital markets instruments;
- Excellent knowledge of the latest regulations, standards and best practices in capital markets, including relevant EU directives and regulations, as well as ongoing initiatives;
- Experience with data gathering and analysis;
- Excellent communication, analytical, report writing and presentation skills;
- Familiarity with or interest in the EBRD region of operations.
- Fluency in written and spoken English.
- Preferably Master’s degree in economics and/or finance.
Responses must be sent through the EBRD Tender Portal before the indicated deadline. Clarifications may be submitted to the responsible contact person.
Closing Date: February 28, 2021
Deadline for Clarifications: February 8, 2021