The $100 million issuance of IIX's latest Women's Livelihood Bond last year was the moment the gender-themed instrument "finally came of scale" due to widespread institutional interest.
That is according to Robert Kraybill, chief investment officer at the impact investment and advisory firm, who has been pivotal in mobilising over $200 million through the Women's Livelihood Bond Series since its first such bond in 2017, which raised $8.5 million.
Woman-led IIX has since led an initiative to develop Orange Bond Principles – so-called because orange is the colour associated with UN Sustainable Development Goal 5 for gender equality – that Kraybill tells Environmental Finance are important to the growth of debt to help finance to empower women.
"We are hoping to support and develop that market for gender bonds. We see interest among government agencies and institutional investors for these solutions, but the market has not seen many, in part due to a lack of a standard," says Kraybill.
"We think that by promulgating the principles and promoting those, then building the infrastructure around that, such as with second party opinions on alignment with the principles, we can encourage more gender-focused impact investment."
The steering committee that devised the high-level principles included Nuveen – which has bought IIX Women's Livelihood Bonds – ANZ and the UN Capital Development Fund.
The Orange Movement aims to 'mobilise' $10 billion by 2030 to advance gender equality worldwide, and to 'empower' 100 million women, girls, and the LGBTQI+ community. Eligible projects include investment in female smallholder farmers, clean energy and clean cooking stoves.
While earlier IIX bonds were labelled as social bonds, the most recent transactions have also explicitly targeted climate benefits and been given a sustainability label.
Part of Kraybill's importance to the development of the market, particularly considering his job title, is in persuading investors of the financial logic of investing in orange bonds.
He says IIX's bonds are structured using partial guarantees from public sector organisations including the Swedish International Development Cooperation and US Agency for International Development, which means these tend to be "relatively low risk, low return" instruments.
The bonds are issued for a tenor usually of four years to raise funds which IIX lends $2 million-$15 million each to about eight-to-10 borrowers, which Kraybill says are generally "medium-sized" organisations that are still sufficiently small to gain transformational impact from the financing.
The first two Women's Livelihood Bonds have already matured, and there had so far been no defaults on any loans financed by the bonds, Kraybill said.
He says every investor in the bonds is characterised as seeking "impact first" before financial returns and the group spans small family offices to large investors including $1.2 trillion asset manager Nuveen's impact business.
Kraybill has big plans for the future of the Orange Bonds initiative and the Women's Livelihood Bond series.
He expects to maintain the rate of dealmaking that has seen it issue these bonds at least every year since 2017.
These plans include to raise $150 million from its next Women's Livelihood Bond, although Kraybill did not indicate when this would be issued.
Meanwhile, another area Kraybill says has seen exciting growth in investor interest is in natural capital – particularly sustainable agriculture and reforestation projects which combine nature and climate benefits, and which generate credits.
IIX is not an investor in this area but advises project developers and helps them raise capital from investors, he added.
"We went from having very few pools of capital focused on funding this to having quite a number of funders, in a very short period of time of about three years," he said.
