Covid bond : an emergency aid funding method worth addressing selectively

The health and economic crisis that has swept the world is of unknown magnitude, and it soon became clear that Covid bonds offer a sustainable solution to finance the post-coronavirus world and address the funding needs required to stem the effects of the pandemic. Almost $100bn in Covid bonds have already been issued on the market since the start of the health crisis, and Ostrum AM expects robust issue volumes over the months ahead. On the back of its overlapping expertise in bond fund management and socially responsible investment (SRI), Ostrum AM has taken a closer look at this market to assess its features, opportunities and limitations of this new product.

With the Covid-19 crisis affecting most of the planet, the UN called on all investors worldwide to join forces to organize the funding needed to curb the severe economic and health problems triggered by the pandemic. A new funding instrument has thus emerged: Covid bonds, built on the same principles as green bonds. These impact investments are aimed at supporting two areas i.e. on the one hand direct investment in solutions to fight against the virus, such as research into treatments, vaccinations, and production of ventilators or masks, and on the other hand emergency support to reduce social impacts, including financing solidarity mechanisms and job protection measures.

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