XxX | Feature Contents Editorial
COVID BONDS: FUNDING THE FIGHTBACK
It has made us prisoners in our own homes, separated us from family and friends, put our jobs at risk, closed pubs, caused queues for food outside supermarkets, expanded the na- tional debt by billions of pounds, given us the indignity of facing the world with DIY hair- cuts and, on a much more serious note, has claimed 500,000 lives globally. The Covid-19 pandemic has impacted our lives in ways that no other event has in living memory and we were unprepared for it. Indeed, not many foresaw the events of the past four months while taking down their Christmas decorations in January. The good news is that investors could play a role in tackling this crisis. The public and pri- vate sector’s need for cash could tie in nicely with pension schemes’ desire to invest in low- risk assets offering stable returns. Just as money is needed to build airports and bridges, it is needed to defend countries against the impact of this pandemic, which resulted in the UK economy contract by more than a fifth in April – the largest monthly fall on record.
Innovation is usually driven by necessity and this is true in the financial services market. Capital was initially needed to meet demand for healthcare and pay non-essential workers’ wages, but now it will be used to get the economy moving again. This could be funded by Covid bonds, a new class of debt that provides the funds necessary to protect people and re-start the economy. This new market has grown rapidly. One estimate puts it at more than £120m, but is this cash being used for what the issuers claim it would be when taking the money? We investigate from page 20. Covid bonds are classed as social bonds and making a social impact will be higher up inves- tors’ agenda when we get the all clear. The chief executive of social investment bank Big Is- sue Invest, Danyal Sattar, tells us about how his team are supporting its clients and the chal- lenge for social lenders in a post-pandemic world. You can read what he has to say from page 16.
Another topic currently in the news is the campaign for greater equality. Our focus, from page 34, is about representation in pension scheme boardrooms. We look at what diverse leadership teams could mean for savers’ pensions, if the organisations entrusted to safe- guard our retirement funds are led by enough people from different backgrounds for us to assess, that is.
As I write, the lockdown rules are on the verge of being eased. As we leave our homes to return to some form of normality, please remember to remain vigilant. Covid-19 might be lurk- ing in the shadows, waiting to make a comeback.
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk Issue 94 | July 2020 | portfolio institutional | 3
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