By Panagri Reporter, April 5, 2023, The International Fund for Agricultural Development (IFAD) has today issued its first-ever euro private placement for €65 million to four German pension funds with the Hamburger Pensionskasse (HPK) as key investor. HPK is one of Germany’s largest company pension funds and works with the German food and beverages sector as well as the retail industry.
This investment will enable IFAD to help thousands of small-scale farmers and their families in rural areas of developing countries adapt to climate change, grow their production and better access value chains and markets at a time when rural populations are being hit hard by food, fertilizer and energy prices and are bearing the brunt of extreme weather events.
“We are particularly proud to partner with these pension funds that, like IFAD, pursue long-term sustainable goals. The investment will help small-scale farmers in developing countries, who produce one third of the world’s food, to make a decent living,” said Natalia Toschi, Head of Funding at IFAD. “The goals we share with the team from Hamburg were an important factor that made this milestone investment happen despite the persistent volatility in current markets.”
“After years of low and even negative interest rates we are now actively using the current interest rate environment to strengthen our direct fixed-income investments again. If these can then be put to greater use and make a real difference, we are very happy. The mission of IFAD coincides perfectly with the interests of our almost one million members, who are looking for a safe, sustainable and valuable old-age provision,” explains Stefan Klein, who is Head of Fixed Income in portfolio management at HAPEV, the mandated administration company.
Since IFAD issued its first two sustainable bonds for a total amount of US$150 million in 2022, the Fund has diversified its offer to investors, now being able to issue in euros. IFAD also offers different tenors. The maturity of the private placement with the pension funds is 12 years.
“With this 12-year bond, IFAD adds another point to its issuer curve, and hopes to continue to populate the curve in the near future. Our ultimate goal is to increase financing for vulnerable rural populations at a time when they face economic and climate hardships. Right now, IFAD’s investments in rural development are more important than ever,” said Toschi.
IFAD issued its first sustainable bond in June 2022 as part of a strategy to explore new funding models to channel more resources to those in need in low- and middle-income countries. It became the first United Nations Fund and the only UN body and specialized agency other than the World Bank Group to operate in capital markets. In 2022, IFAD issued two bonds for a total of US$ 150 million. IFAD has an AA+ rating from both Standard & Poor’s and Fitch.
About 3 billion people live in the rural areas of developing countries and rely to a significant extent on small-scale farming for their food and livelihoods. Small-scale farmers produce one third of the world’s food and up to 70 percent of the food in low- and middle- income countries. While being essential for global food security, they often live in poverty and hunger. About 80 per cent of the world’s extremely poor people reside in rural areas.
The number of people suffering from hunger has been growing in recent years and reached approximately 828 million in 2022. The number of people facing acute food insecurity soared as well to reach 205 million people in mid-2022 due to the combination of conflicts, extreme weather events, the acceleration of climate change and successive economic shocks, according to the 2022 Global Report on Food Crises.