NAB 0.14% $34.64 national australia bank limited

(The author is a Reuters Breakingviews columnist. The opinions...

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    (The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

    By Clara Ferreira-Marques SINGAPORE, Nov 17 (Reuters Breakingviews) - Investors have flocked to the first U.S. dollar-denominated bond promoting gender equality at work. They are making a good investment. The issue makes for good PR at a bad time for the war of the sexes, but there is a real correlation between virtuous behaviour and sound returns. Unfortunately lack of supply is a problem. That may stymie efforts to get fixed-income markets to drive social change.

    Australia's QBE Insurance Group (QBE) saw demand of over $9 billion for the $400 million bond, to be used to finance or refinance debt from companies that meet its equality standards. It was more than 24 times covered at the top end - double what the insurer usually sees.

    The perpetual bond is now bid around 101.5 cents on the dollar, slightly better than comparable non-pink bonds. The same holds true for a 5-year bond issued by National Australia Bank (NAB) in March.

    Cynics might argue such strong demand reflects the attractiveness of the issuers. Fixed-income markets are an unlikely means of solving workplace inequality, even in Australia, which already does reasonably well on metrics like the number of women on boards.

    But while these instruments might not solve salary gaps overnight, they can help highlight good corporate citizens. And good citizens tend to be good investment targets.

    Bank of America Merrill Lynch research has found environmental, social and governance (ESG) factors to be the single best signal of future risk; such criteria would have helped investors avoid 15 out of 17 bankruptcies the bank studied since 2008. More than half the investors in the QBE bond came from outside the usual pool of ESG money. That suggests people are taking these lessons on board.

    The problem is the universe of worthy investments is still small, and dominated by environmental themes. But even the booming “green bond” market - issuance is already above $100 billion this year - makes up less than a sliver of $100 trillion of global institutional money. It’s laudable and lucrative for investors to put real money behind their ethics. They just need more places to do that.

    On Twitter http//twitter.com/claramarquesrtr

    CONTEXT NEWS - Australia’s QBE Insurance Group priced the first U.S. dollar-denominated gender equality bond on Nov. 10. Proceeds will be used to finance companies meeting criteria related to the treatment of women in the workplace, QBE said.

    - Applications to subscribe to the $400 million issue amounted to more than $9 billion, according to one source with knowledge of the matter.

    - National Australia Bank sold an A$500 million gender equality bond in March. Proceeds will be used to finance or refinance assets of Australian businesses that champion women and equality, NAB said.

    - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe

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    QBE Insurance's dollar 'gender equality bond' more then 20-times 
    

    oversubscribed National Australia Bank sells rare A$500 million gender equality bond QBE gender equality bond framework http//www.group.qbe.com/sites/default/files/Investor%20Documents/October%2025%2C%202017%20-%20QBE%20Gender%20Equality%20Bond%20Framework.pdf NAB statement on the bond http://news.nab.com.au/investors-put-500-million-behind-worlds-first-social-bond-promoting-workplace-gender-equality/

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