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Financial investors buy $700 million in bonds for global vaccines


Public health emergencies arise around the world on a regular basis.

Humanitarian and aid organizations need to act quickly, but they need money to get work done. An emergency appeal for millions, if not billions, of dollars can take time to fulfil.

So what if the money was already available? With the money in place, an organization can respond to an emergency immediately.

The International Finance Facility for Immunisation Company (IFFIm) does just that for the GAVI Alliance, a public-private global health organization that increases access to immunizations in poor countries by working with governments, donors and the private sector.

IFFIm sells bonds to private investors in order to raise money for GAVI’s vaccine work. When GAVI needs money a request is made to IFFIm’s board to disburse the needed funds. For vaccines, a health solution that requires early action, gaining access to needed funding quickly has a big impact on programs like the eradication of polio.

“Having predictable, long-term funding in place will help us ensure that the world’s most vulnerable children have access to healthcare, and that is a critical step in achieving the goal of ending extreme poverty by 2030,” said Jim Yong Kim, President of the World Bank.

The GAVI Alliance is a sort of middleman between donors (Gates Foundation, United States, etc), pharmaceutical companies (GSK, Merck, Pfizer, etc) and governments (afghanistan, Eritrea, Haiti, etc). It negotiates on behalf of countries to access lower vaccine prices and donations. The money provided by donors allows GAVI to assist poor countries in purchasing vaccines.

The money supplements the cost further and countries take on more of the cost as the country improves. A country graduates out of GAVI once the gross national income (GNI) per person exceeds $1,550.

IFFIm raised $700 million earlier this month through a new three-year floating rate bond issue. Investors in the bond earn a competitive return on their investments while providing money that will increase access to lifesaving vaccines.

“For us, this is the perfect high social-impact investment, says Benjamin Bailey, Fixed Income Manager, Praxis Mutual Funds. “You’re helping immunize millions of children through an investment that fits comfortably in our mutual fund portfolio. What could be better than that?”

An Innovative Solution

The raising of money is important, but the innovation lies in the way the bonds work. IFFIm is able to sell bonds thanks to donors like the UK and France. Nine countries have pledged sums to be paid to IFFIm over a specified period of time.

This is not like other pledges. Countries make a legally binding commitment to pay off commitments over five to twenty years. The binding commitments allow IFFIm to go to the financial markets and issue bonds giving access to funds promised a decade down the road today.

“A lot of our funding is short term,” explains David Ferreira, Managing Director of the Innovative Finance department for GAVI. “We may get commitments for his year or for three years.”

The short term commitments are not binding. Countries can make a pledge for a few billion dollars, but not provide all of the money if there is political turnover or an economic decline. GAVI wanted to find a way to smooth out the funding cycle in a way that gave countries the ability to make longer term commitments and provide GAVI the money it needs. IFFIm was born out of that need.

Established in 2006, IFFIm is independent from GAVI. It has its own board of directors who work with GAVI. The money raised is solely meant for GAVI’s use, but GAVI must make a request to the IFFIm board in order to get the money raised.


IFFIm provides the long term and flexible funding that GAVI needs, says Ferreira. The design of the agreements is vital to IFFIm working.

“Every time of the pledges comes due the donor will pay into IFFIm on the date,” says Ferreira.

Binding commitments benefits both the donors and GAVI. The United Kingdom, for example, committed to pay $2.98 billion over 23 years to IFFIm. Paying smaller installments over such a long period of time allows the UK to commit to GAVI’s mission while using only a fraction of its total budget. Shorter term pledges to GAVI can reflection the economic and political state of the UK. By signing a binding commitment, the money pledged over 23 years is available immediately.

The money raised in the bonds is then managed by the World Bank. Since the establishment of IFFIm in 2006, the AA+ rated bonds have raised more than $4.55 billion. Of that money, IFFIm has provided $2.2 billion to GAVI. The high bond rating reflects the security of the scheme and the way that the money is managed. Ferreira says that the World Bank is able to provide a safe and modest return on the money which helps to pay for the returns on the bonds.

“There are countries that understand how important IFFIm is for global health,” he said.

More Funding for Vaccines

GAVI hopes to see the expansion of IFFIm. Brazil indicated recently that it is interested in signing a commitment through IFFIm. Discussions are currently underway to make it happen and grown IFFIm as a part of GAVI’s next replenishment meeting in 2015.

It reflects one of the recommendations from an independent evaluation of IFFIm in 2011. Researchers said that the model was not perfect, but their main criticism was that IFFIm was not meeting its potential. The tool designed to help fund GAVI could be even better. The model may be hard to apply to other organizations, but IFFIm has created a positive impact on public health. For example, IFFIm funding allowed for polio funds to shift in response to changing events.

“As we celebrate this week the 50th anniversary of the first ever international bond issue, Vaccine Bonds are an example of the formidable evolution of the international bond markets, providing effective financing tools for social impact,” remarked IFFIm Chair René Karsenti.


About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]