Fw: Ref.: (LML) 1.25 billion US dollars raised rapidly; interest rate tied to key indicators

 

Leprosy Mailing List – September 20,  2020

 

Ref.:  (LML) 1.25 billion US dollars raised rapidly; interest rate tied to key indicators

 

From:  Joel Almeida, London and Mumbai

 

 

Dear Pieter and colleagues,

 

Novartis has raised over 1.25 billion USD within a short time of placing a bond. This is a promise to pay creditors a specified rate of interest (in addition to repaying the capital in due course). Interestingly, the interest rate is tied to the performance of Novartis in improving access to effective interventions against diseases including HD (leprosy).

 

https://esgtoday.com/novartis-launches-healthcare-industrys-first-sustainability-linked-bond-offering/?utm_source=rss&utm_medium=rss&utm_campaign=novartis-launches-healthcare-industrys-first-sustainability-linked-bond-offering 

 

This is a first in the health sector. It means that Novartis is betting on performing well in terms of widening access to effective interventions for people even in low-income countries. Else Novartis will pay a higher rate of interest on the bond. The money raised can be used to further Novartis' general money-generating goals, and it can do so more effectively if Novartis performs well on widening access to effective interventions.

 

The significance of this pioneering bond is that large businesses can tie their financial performance to the achievement of social goals. 

 

As a part of the small WHO HQ team in the 1990s that brainstormed the transformation of financing for TB control (with some success), I can say that this bond is transformational because it opens the door to governments and others issuing bonds of their own. Governments raise money through taxation, but also through bonds. If governments tied the interest rate on bonds to the government's measurable performance on social goals, then life steadily could improve for the most vulnerable people. 

 

It becomes more important than usual now to fine-tune performance indicators and to measure outcomes reliably. There is a greater incentive to spread interventions, and it is important to ensure that no harmful interventions are spread while vigorously promoting what demonstrably works.

 

Joel Almeida

LML - S Deepak, B Naafs, S Noto and P Schreuder

LML blog link: http://leprosymailinglist.blogspot.it/

Contact: Dr Pieter Schreuder << editorlml@gmail.com

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