SSAs lead by example

The supranational, sovereign and agency sector is renowned for innovation and has long been a global leader in diversity. KangaNews and TD Securities invited women from six global funding entities to participate in a discussion focused on market developments and the outlook as the world slowly emerges from the COVID-19 pandemic.

  • Andrea Dore Head of Funding WORLD BANK
  • Mascha Ketting Senior Manager, Capital Markets and Investor Relations BNG BANK
  • Ana Kotamraju Principal Treasury Specialist ASIAN DEVELOPMENT BANK
  • Eila Kreivi Head of Capital Markets EUROPEAN INVESTMENT BANK
  • Petra Wehlert Head of Capital Markets KFW BANKENGRUPPE
  • Laura O’Connor Managing Director, Origination and Syndication TD SECURITIES
  • Yuriy Popovych Director, Fixed Income Syndicate TD SECURITIES
  • Laura Quinn Managing Director, Head of Primary Markets TD SECURITIES
  • Sam Swiss Chief Executive KANGANEWS

The discussion covered topics including the role of supranational and agency borrowers in supporting pandemic-relief efforts such as the global vaccine rollout, and the present and future of sustainable finance. Those present also offer insights into their careers. Participants represent institutions that at the time of the discussion had issued A$180 billion (US$128.9 billion) of Kangaroo bonds and NZ$35 billion (US$22.9 billion) of Kauri bonds.


Swiss It has clearly been an unprecedented period for global markets and for supranational, sovereign and agency (SSA) issuers in particular. How has the nature of the activities SSA entities finance been changed by the pandemic and is COVID-19-related funding still playing a role in programmes?

KREIVI SSAs, governments and the public sector in general were the first to finance COVID-19 support. At EIB [European Investment Bank] we had a strong focus, at first, on the SME landscape in Europe. Our biggest COVID-related tool was a guarantee fund, though this didn’t have a funding impact as it is unfunded unless we have to pay for the guarantees. In our case, there wasn’t a huge change in funding volume.

What increased was sustainability-bond issuance, because healthcare finance demand in our member states increased a lot – especially in southern European countries, which were badly hit. Then there was an external, indirect impact in that governments started to borrow a lot more. Many other peers also started to borrow more and in Europe we now have this new kid on the block – the biggest kid on the block so far – with the EU issuing bonds.

WEHLERT KfW Bankengruppe has developed a much stronger focus on financial cooperation. We do this on behalf of the government to support developing countries. We try to support the green transition and we have also done investments in the social field during the pandemic. COVID-19 has given developed countries a chance to change things, but for the developing world it is still difficult to catch up. 

However, funding programmes don’t always reflect world change. The major change for KfW last year was that we were able to take part in funding from the federal government and the ECB [European Central Bank]. Therefore, we ringfenced our capital-market funding. We were able to finance all the measures under the COVID-19 programme via the German DMO [Debt Management Office].

This meant we actually reduced our funding volume. In 2020, we ended up with total funding of €66.4 billion (US$78.3 billion). For 2021, we have increased our expected funding volume to around €80 billion. In particular, the field of green finance is growing this year – reflected in our large green- bond issuance. It feels like our funding is getting back to normal – it is much more international again with a focus on green bonds. The share of what we do in green has increased and so too has currency diversity.

DORE The pandemic has had a direct impact on World Bank’s funding, and this will continue. In the past two financial years, World Bank raised the highest amount of yearly funding in its history, including the largest single transaction – a US$8 billion five-year bond. IBRD [International Bank for Reconstruction and Development] raised US$74 billion and US$67 billion respectively in FY20 and FY21. IDA [International Development Association] raised close to US$10 billion in the past fiscal year – doubling the funding raised in the previous fiscal year.

IDA accessed capital markets for the first time three years ago, and the expectation then was that it would take about a decade to grow its annual funding volume to US$10 billion plus. IDA has had to rapidly accelerate its programme to help its member countries deal with the immense negative impacts of COVID-19 on health systems and economies.

In response to the crisis, the World Bank Group launched a US$160 billion funding package for a period of 15 months, reaching more than 100 countries within the first few months of the pandemic. At the start of the crisis, the focus was on strengthening health systems and supporting the social safety net. But the scope had to be expanded to address the negative impact of COVID-19 on the overall economy.

The impact of COVID-19 on developing countries will continue to be felt for decades. It has brought 150 million people back into extreme poverty and, for the first time in about two decades, most of the economic gains made in those countries will be reversed.

CHAO COVID-19 has played a huge role in where IFC [International Finance Corporation]’s funds go. On the business side, we started with a COVID-19 facility with shorter-term funding for our clients. More recently, we have been looking at a global health platform for vaccine production, medical equipment and the like. There has been a refocus on health-related solutions on the business side.

On our funding side, in March 2020 – the day the WHO [World Health Organisation] officially declared that COVID-19 was a pandemic – we issued a US dollar social bond. This deal probably took a lot of years off the lives of the funding team at IFC but it was also an incredible experience. 

There was a lot of volatility and swap spreads were tightening dramatically at the time of execution, but investors stayed in the transaction. The fact that it was a social bond and we had highlighted that COVID- 19-related projects were a part of our social-bond programme meant we received strong support from investors. They are focused on yield and spread most of the time, but with this bond it seemed like they looked beyond these factors. It was a great outcome and many of our peers followed.

KOTAMRAJU From ADB [Asian Development Bank]’s perspective, COVID-19 continues to have a tremendous impact in developing Asia. Andrea Dore mentioned the pandemic has brought 150 million people back to extreme poverty. An estimated 75-80 million affected are in the Asia- Pacific region. I agree that the pandemic has reversed some of the progress made combating poverty.

Pandemic response continues to be a central focus for ADB. In March last year, like many of our peers, we announced a comprehensive package of US$20 billion. Toward the end of 2020, we also announced a US$9 billion vaccine package. ADB’s priority is to help its developing members transition toward a green, resilient and inclusive recovery. A critical part of this is to facilitate access to vaccines.

We increased our funding programme last year and again this year compared with historical levels. Prior to COVID-19, we had been funding in the range of US$20-25 billion a year. Last year was a record, at US$35 billion. This year, our running total is just more than US$31 billion.

This has allowed us to tap various markets. Similar to IFC, even at the height of the volatility in March 2020, we were able to fund in large size – investors were supportive and the COVID-19 response resonated with them.

We had already issued health bonds prior to the pandemic, but we saw an increase in interest from investors for these themed bonds. We also introduced education bonds to help address the detrimental impact of the pandemic on students in developing Asia as a result of school closures.

KETTING COVID-19 has had a huge impact on everyone, on a personal and professional level – and this also includes our clients. Municipalities have experienced decline in revenue and Dutch housing associations are unsure if tenants can pay their rent. The healthcare sector has also taken a massive financial toll.

The Dutch government has mostly taken on the consequences of COVID-19 in the Netherlands, which has increased its funding. As a result, BNG Bank has not issued any bonds specifically dedicated to COVID-19.

“It feels like our funding is getting back to normal now – it is much more international again, and the focus is on green bonds. The share of what we do in green has increased and so too has currency diversity.”

Renewed support for Australasian markets

Australian dollar supranational, sovereign and agency (SSA) issuance has rebounded in 2021 and New Zealand dollar issuance is close to another record year. New Zealand dollar trades are less frequent but the ones that do come tend to be large in size. There has also been a big increase in environmental, social and governance (ESG) issuance, especially in Australia, including positive engagement with labelled bonds from investors.

POPOVYCH How consistently can issuers rely on the Australian and New Zealand dollar markets?

DORE Both markets remain important for World Bank, ranking consistently in the top five currencies of issuance. The bank has adopted a strategy of not accessing these markets frequently but instead focusing on bringing more liquid trades to market. This has worked well for World Bank and investors.

World Bank had a very good funding year in the New Zealand market in 2020, issuing almost NZ$3 billion (US$2 billion). This exceeded the bank’s issuance in the New Zealand market in the previous two years combined and what we raised in the Australian market during the same period.

In April this year, World Bank executed its largest seven-year bond – NZ$1 billion, a remarkable milestone. This is the largest bond issued in that tenor by an SSA. The first-ever World Bank Kauri trade in 2007 was a seven-year NZ$350 million bond – considered a very large trade at the time. It took more than a decade for the bank to get to the NZ$1 billion mark in seven-year tenor.

Quinn World Bank treasury manages funding for IFFIm [International Finance Facility for Immunisation]. Andrea Dore, could you share some insights specifically on the role of Gavi, the vaccine alliance and thus IFFIm, in pandemic recovery?

DORE Gavi has been playing an important role fighting COVID-19. In addition to its support of R&D for vaccines, Gavi has shipped more than 300 million COVID-19 vaccine doses to more than 50 countries under its COVAX facility and secured more than two billion doses for delivery in 2021. IFFIm’s vaccine-bond issuance has partly funded these activities.

IFFIm is one of the financing sources for Gavi, the vaccine alliance. It was set up as a facility focused primarily on financing vaccine research, development and distribution to save the lives of children in poor countries. Donors give long-term pledges, which are front-loaded through the issuance of IFFIm bonds. The model is very simple and powerful. It is based on the premise that vaccines are needed now, not in the future when the funding from the pledges becomes available.

IFFIm’s increased funding need this year was met with strong support from investors given the issuer’s unique and pure mission. For investors looking for social bonds, IFFIm’s vaccine bonds are perfect.

Last year, IFFIm issued one of its largest bonds – at US$750 million – since its inaugural US$1 billion bond in 2006. In addition to its US dollar bonds, IFFIm issued a Norwegian krone bond to frontload pledges from the Norwegian government, aimed at supporting R&D for COVID-19 vaccines.

World Bank is IFFIm’s treasury manager, responsible for managing funding strategy and implementation, rating agency and investor outreach, risk management, and investment management.


Quinn SSA issuers have been among the biggest adopters of use-of-proceeds (UOP) green, social and sustainability (GSS) bonds. However, some also argue that the nature of entities in the sector means whole-programme- based ESG assessment is more appropriate than security-level analysis or labelling. How do issuers see the market evolving over the coming years?

KREIVI Investors are not only happy with but also insisting on getting more information. This requirement is more easily fulfilled by doing labelled bond issuance.

The goal should be that every entity is so transparent regarding what it does and what it finances – be it a corporate, a financial institution or a multilateral development bank – that we no longer need special products. But we are still far from this.

We want to promote transparency – this is where we think we can make a significant contribution. Just think about what EIB has now committed to. By 2025 we want half our lending to go to climate and environmental projects. The other half can be anything, but it should not do harm to any environmental objective, including climate. One could say that everything we do is sustainable – in the sense that it is doing good or at least not doing harm.

Having said this, we won’t abandon our labelled products because investors demand this information and we are happy to give it. I’ve also found that once you start to develop the data, you get very interested yourself.

When you are labelling bonds, the contribution should be substantial. Doing something that is business as usual (BAU) – such as providing standard training for a workforce – cannot be considered an activity for a social bond. This is a bit vague in the social space, but issuers should make sure projects have something special in their content or target group above and beyond BAU in order to be called social.

We need labelled products, and this is why they are popular with investors – because we can give this information. We are getting more granular questions from investors. An example is when we were doing a project in Burkina Faso that provided clean drinking water to 500,000 people for the first time.

Investors thought this was good, but then asked about the income structure of the people who are benefiting from it.

This kind of dialogue is so good that we do not want to let it go. We have a very good story to tell. It is not a question of being able to fund – it is possible to issue almost any kind of bond. We have issued a euro bond today with a book of €35 billion. Even brown industries still get funded, unfortunately. What labelled issuance is doing is satisfying the almost endless demand for more information and more specifics on what is happening, what issuers do for whom, and how much.

Quinn The SSA sector as a whole has always been at the forefront of innovation in capital markets. Should innovation also come into play when issuers look at labelled products – in other words, taking on the role of being responsible for the development of the GSS bond market?

WEHLERT This is one of the reasons KfW started to issue green bonds – our view is very holistic as an institution. We wanted to issue green bonds to accelerate this process at the institutional level. KfW has always focused solely on green bonds in the sustainability area and only on our large loan programmes - have given us the possibility to issue €10 billion and more this year – a very large size in capital markets.

As a result, we have concentrated on UOP green bonds, with the luxury of being able to develop benchmark-sized notes of up to €3 billion and larger. Our idea was to develop a good product welcomed by investors and we can work on the price effects. We have been able to see where our green bonds trade differently on the curve compared with our conventional bonds. This was followed by the [German] federal government with the twin-bond concept – investors really like this.

However, this is just one element of our strategy. We want investors also to develop a holistic view on KfW. For this, we have focused on publishing ESG ratings. Today we are in the market with a green bond, and increasingly more investors are asking for additional information over and above the impact or UOP of the green bonds. Investors are requesting information about the sustainability and climate strategy of the institution.

“Pandemic response continues to be a central focus. ADB’s priority is to help its developing members transition toward a green, resilient and inclusive recovery. A critical part is to facilitate access to vaccines.”


SSAs Lead the charge on diversity

The purpose of the KangaNews Women in Capital Markets Yearbook is to amplify female voices in the market. Senior supranational, sovereign and agency executives offer their reflections on their careers as women in this sector.

QUINN Early in my career, even when I didn’t have many other female colleagues, I always felt very fortunate to have many senior female SSA [supranational, sovereign and agency] clients as role models. What has changed in your time in capital markets and where can further progress be made?

CHAO When I started in banking in New York City more than 15 years ago, I remember thinking ‘why are all the managing directors male and white?’ The organisations I worked for hired diverse junior staff, but it seemed that the management level was always less diverse.

Fast forward to today, in my current job I love that the majority of my peers are women, and often women of color. This is fantastic progress and I think part of the reason is that we work in the SSA space where diversity and inclusion (D&I) is very much a part of our mission.

Swiss BNG’s sustainability bonds are specific to what is happening in the Netherlands.

KETTING Correct. We are the Dutch promotional lender, so we deliberately focus on financing the Dutch public sector. We do balance-sheet financing, so we have very small dedicated green projects.

We recently embarked on a “Road to Impact” strategy, where we have been defining direction and strategic priorities. Our main priority is to maximise the social impact of our activities and not to maximise profits, so we would like investors to understand the value and benefits of our entire balance-sheet financing. We would like them to see how this contributes to development and the UN SDGs [Sustainable Development Goals], not only to environmental aspects.

On the asset side, with the “Road to Impact” strategy, we will measure and report on social impact using SDGs 11, 3, 4 and 7 – cities, healthcare, education and clean energy.

On the liability side, we started issuing sustainability bonds in 2014, using a best-in-class framework. But changing needs among investors and – for us – a requirement to use broader eligible UOP to include SDG-linked expenditures of the municipalities, have led us to review our best-in-class framework. We have now updated this to an SDG-linked framework for Dutch municipalities.

BNG finances the budgets of all the 352 municipalities in the Netherlands. These municipal budgets are split into tasks and classified by the COFOG [Classification of Functions of Governments], developed by the OECD and defined by the UN. We have created a methodology where we link the 52 municipal tasks to the 17 SDGs and their underlying asset tasks, making it possible to distinguish between SDG-linked tasks and those not linked to the SDGs.

Last year we did 13 per cent of our funding in SDG bonds. This year it increased to 25 per cent. Our aim in the next 5-10 years is to replace our existing benchmark curve with sustainability bonds.

“The impact of COVID-19 on developing countries will continue to be felt for decades. It has brought 150 million people back into extreme poverty and, for the first time in about two decades, most of the economic gains made in those countries will be reversed.”

Swiss How is IFC viewing UOP bonds versus whole-of-issuer assessment?

CHAO We have been talking about this a lot internally. We chair the executive committee of the GBP [Green Bond Principles] and SBP [Social Bond Principles] and we like to think we helped develop the GSS bond market. We want to continue doing this.

Simultaneously, we see our peers – including our sister institution – take a more institutional position. This makes a lot of sense for supranationals, whose mandate is a social one. Currently, we are thinking about how to bridge UOP labelled bonds and issuer-level sustainability credentials.

Looking at our green and social bonds, their percentage of our funding programme has come down – or at least it’s not growing. If we want to continue tapping investor interest in ESG and SDG bonds, we will need to do more than just green and social.

This is investor driven. As Eila Kreivi mentioned, data is very important. But there are funds that will only buy labelled bonds and we want these funds to continue buying our bonds. Other investors have a broader approach when it comes to sustainable bonds and some of them will look at IFC and SSAs in general as sustainable and still buy our plain-vanilla notes.

There is a spectrum of what investors are looking to buy. We want to highlight that the reason we exist is sustainability and address this from an institutional perspective.

“The goal should be that every entity is so transparent regarding what it does and what it finances – be it a corporate, a financial institution or a multilateral development bank – that we no longer need special products. But we are still far from this.”

Swiss ADB has been increasing the variety of labelled bonds it offers to the market. Can you outline the strategy?

KOTAMRAJU Yes, we are growing our theme-bond programme, although I agree with my co-panellists that we are sustainable issuers by definition. ADB envisions a prosperous, inclusive, resilient and sustainable Asia and Pacific, while sustaining its efforts to eradicate extreme poverty in the region.

In ADB’s Strategy 2030, accelerating progress in gender equality and tackling climate change are embedded in our operational priorities. The goal is to have at least 75 per cent of committed operations addressing these two priority areas by 2030.

Sustainability is core to the institution and transparency regarding our operations is key. All loan documentation is available online, including how our projects align with the SDGs. Our projects are evaluated at completion and results are accessible online.

From a funding perspective, our theme bonds were developed in response to demand from investors seeking to highlight specific areas of our operations. To meet this demand, more than a decade ago we started to issue water bonds and clean-energy bonds, then green bonds, gender bonds, health bonds and education bonds. Many of these are done in the form of private placements based on specific investor preference.

While we have seen ebbs and flows in demand for different products over the years, in the last two we have noticed a spike in demand for gender and health bonds. This year is a record year of issuance for ADB in themed bonds and we introduced two new themes – education and blue bonds – and issued gender bonds in public format for the first time.

“There are funds that will only buy labelled bonds and we want these funds to continue buying our bonds. Other investors have a broader approach when it comes to sustainable bonds... We want to highlight that the reason we exist is sustainability.”

Swiss Is it true that World Bank is shifting focus away from UOP toward an institutional approach to sustainable financing?

DORE World Bank has been active in the green-bond market since its first green bond almost two decades ago. A few years ago, we decided to take a broader approach going beyond green bonds, issuing other labelled bonds highlighting the activities of World Bank’s entire balance sheet.

Like the other SSAs on the panel, the projects World Bank finances are social with climate components. Climate financing cuts across all World Bank projects, including sectors not typically associated with climate financing such as health, education, trade and governance. Focusing only on green bonds means leaving out a huge part of World Bank’s portfolio that supports climate action in many different sectors.

World Bank is one of the largest funders of climate financing for developing countries. More than 90 per cent of all World Bank projects by number have a climate component, representing almost one-third of World Bank lending activity by volume. Therefore, it is important for us to focus on UOP for the entire balance sheet.

Recently, World Bank announced its new Climate Change Action Plan. The plan takes a whole-of-the-economy approach to climate engagement, helping countries integrate climate change into their development strategies to achieve the most positive impact.


O’Connor What are the key drivers of market selection when it comes to funding in 2021? Our recent SSA issuer survey suggests the focus on core markets has eased, with diversification of funding currency more of a goal. Is this a fair assessment? If so, is it more the product of economics, a settled market or something else?

KOTAMRAJU We diversify our programme across markets. We are primarily a US dollar-based funder and our most active currency is US dollars. The US dollar benchmark market has our largest outstanding borrowings and most liquid curve. We also fund in other currencies – 22 in total this year and last.

Australian and New Zealand dollars are still in our top five currencies, with euros and sterling. In addition, we fund in emerging-market currencies, including Asian local currencies, to help fund local-currency lending.

DORE The bulk of our funding came from core markets, with the highest volume coming from the US dollar market. However, the goal is to continue diversifying World Bank’s funding. World Bank has a large programme so it cannot rely only on one or two markets.

World Bank has also focused on extending the maturity of its borrowings and for this reason funding activities have increased in the euro market, the deepest pool of long-dated funding. Last year, IBRD executed its longest benchmark bond – a €2 billion 40-year bond. The increased euro funding enabled IBRD to extend maturity to almost nine years last fiscal year, from a historical average of around five years.

IDA’s funding strategies are similar to IBRD but the differences in balance-sheet composition provide IDA added flexibility. For example, while IBRD’s balance sheet is denominated in US dollars, IDA’s balance sheet is denominated in SDR [special drawing rights]. This gives IDA added flexibility because it does not have to rely on swapping proceeds back into dollars like IBRD. This allows IDA to separate investor demand and ALM [asset-liability management] considerations.

O’Connor A year or so ago the market was talking about the potential consequences of the massive EU issuance programme for the euro market and its global ramifications. How has this played out? What have issuers seen, especially in euro liquidity and relative value, and has the EU’s presence affected issuance strategy?

KETTING EU issuance resulted in lower issuance by certain sovereigns. Regarding relative value, we have seen a hiccup with the inaugural issue under the new EU programme where investors were preparing for a flood of supply and hoping for proper pick-ups. What we see now is that most issuers will avoid going head-to-head with the EU – certainly BNG will try to avoid this – so it has affected our issuance strategy.

However, things have worked out quite well and there is plenty of liquidity given the EU’s jumbo-sized book. We have been able to complete our funding at tight levels. The EU now has a specific issuance timeline that helps us and other issuers. ECB buying will back up the curve on the EU – also very helpful.

KREIVI When the EU programme was announced it was daunting – especially as the EU name is closest to EIB and ESM [European Stability Mechanism]. But it is a very positive sign for Europe that there was such a show of solidarity and joint action. This reflected positively on the region. The huge issuance has passed without changing valuations. Initially there was some movement, but this went away in the first couple of months and now our spreads are the same as before, or tighter.

Positively, the market is deeper and more liquid so there has been more investor interest from outside Europe. The practical consequence is there is some congestion in issuance windows as the EU is in the market all the time, so we must find the windows to sneak in and out of. But demand is not a problem if central banks are supportive.

We have not really changed our funding strategy or the currency composition. When QE was ongoing but EC funding had not started, some asked why we did not just fund entirely in euros because the market was deep enough. Then the EU announced its programme and proved we were wise not to rely on one leg only, because these kinds of things can happen any time and we do not know in advance what their effect will be.

We have kept our funding programme stable in approach and composition. QE may not continue indefinitely and we want to keep the product palette that has worked in the tough circumstances of the various crises over the last 10-15 years.

We do not want to stand on one leg, be it euros, US dollars or even noncore dollars. We want to be balanced. This has served us pretty well – even though nowadays there is no pricing advantage. A decade ago, we were asked why we do not fund everything in US dollars and we said we did not want to abandon our home currency. Now people are asking why we do not just fund in euros. Our response is we do not want to abandon the US dollar market, which has served us well during the crisis.

WEHLERT I can only echo what Eila Kreivi says. Issuance overall has benefited – just look at what happened this week. We have just seen the EU issue, yet EIB and KfW are both in the market today. We all have our funding programmes to complete and, with the support we have from the QE programme, this is not a problem at all.

Regarding changes to the funding programme, it’s the same for KfW as it is for EIB. I am very proud to have such an international funding programme. Things change over time and on average it has always been beneficial to access different markets, especially because there are different investors in each currency.

Take the US dollar and euro markets, for example. The books look completely different. We still see some Asian investors in euro deals, so this offers diversification.

Simultaneously, we do not see a lot of European investors going into our US dollar deals. We can see that the markets complement each other perfectly. This is something that differentiates us from the EU – which issues only in euros. We are always well positioned when new issuers come into the market. Our international reach makes us more resilient and the EU volume makes the sector more sovereign-like and illustrates European unity.

“What we see now is that most issuers will avoid going head- to-head with the EU – certainly BNG will try to avoid this – so it has affected our issuance strategy. However, things have worked out quite well and there is plenty of liquidity given the EU’s jumbo-sized book.”

O’Connor Inflation is a topic of debate in global markets for the first time in a decade and there is a chance the long cycle of ever-lower rates may be coming to an end. How, if at all, has this affected market behaviour?

CHAO The most obvious thing we see is demand for floating- rate notes (FRNs). In the US, we were pleased to finally issue a SOFR FRN in June, and we will continue building out our FRN curve. With inflationary pressures, this is a potential avenue for investor demand.

We have also looked at FRNs in other markets – including in Australian dollars. We have issued FRNs in Kangaroo format before. It will be interesting to see the level of demand from investors outside the US dollar market.

Our programme is the opposite of the EU – we are the little kid on the block. When we look at each transaction we do in the public space, we want to be that much more careful because our programme isn’t that big. We need to make sure each deal makes sense in pricing and duration.

Andrea Dore has mentioned World Bank is looking for longer duration. On the lending side, we have seen our programme shorten a bit in weighted-average tenor. This means we have capacity to issue a little bit shorter on a weighted- average basis.