New 'vaccine bonds' offer 16 per cent return

Finance | Vibeka Mair | 4 Mar 2009

HSBC has created a new investment vehicle with the tax advantages of an ISA in a bid to raise £50m to help vaccinate children in the world’s poorest countries.

The new Vaccine Investment ISA will see the International Finance Facility for Immunisation (IFFIm) issue ISAs through HSBC to support the work of the Global Alliance for Vaccines and Immunisation (GAVI) which runs vaccination programmes in 70 developing countries.

The Treasury recently made changes to the UK ISA regulations to allow institutions to issue bonds with the tax advantages of being held within an ISA, if their contributions are used for humanitarian development projects.

As well as the Vaccine Investment ISA, HSBC will offer a Vaccine Investment Plan for those who have used or are not entitled to an ISA allowance for amounts up to £999,999. The minimum investment is £1,000.

Both investment products will be available from 2 March to 24 April on a first-come, first-served basis. They will provide a fixed return of 16.2 per cent together with the original capital repaid in full at the end of the fixed five-year one-month term.

The products are aimed primariky at individuals, but charities may apply too, and HSBC will devise a bespoke product for them.

130 children vaccinated for £1,000

Every £1,000 invested will help immunise more than 130 children against life-threatening diseases.

International development secretary Douglas Alexander said: “The economic downturn could push millions of people into extreme poverty and cause the deaths of up to 2.8 million children. Innovative initiatives like this are vital if we are to prevent this financial crisis from becoming a human crisis.”

IFFIm has raised more than $1.6bn to support GAVI immunisation programmes since 2006. IFFIm has triple-A rating due to the support of seven governments led by the UK, who have pledged to contribute money over 20 years. The proceeds of these pledges are used, among other things, to repay the initial investments plus the fixed return.

The GAVI Alliance is a public-private partnership including partners such as Unicef, World Health Organisation, the World Bank, governments and the Bill and Melinda Gates Foundation.

Who's Who: Vibeka Mair

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