Global Citizenship Report 2017

Innovative Financing Mechanisms Many investors are looking for returns beyond profit, and Citi offers products that deliver on this intent. Thematic bonds — such as green, social and sustainability bonds — provide a way for investors to see yields, while also contributing to positive social and environmental solutions. Thematic bonds continue to evolve to address new needs and issues, and Citi is working closely with clients and partners on new products. Vaccine bonds, for example, help finance a critical public health issue in the developing world. Each year, it’s estimated that more than a million and a half children globally die from preventable diseases. Due to a lack of predictable funding, local health organizations in poor countries are often unable to supply and implement vaccines for diseases including pneu- monia, polio and yellow fever. Bonds are one financing tool that can address these funding issues. In November 2017, Citi helped manage a $300 million, three-year vaccine bond for the International Finance Facility for Immunisation, a fundraising organization providing development assistance. The bond was oversubscribed and will be used to run immunization programs by Gavi, the Vaccine Alliance. This follows on a similar issuance Citi supported in 2016. In Mexico, the federal government has made financial inclu- sion a national priority. In August 2017, they made a notable commitment with the issuance of the country’s first social bond, on behalf of Mexico’s development bank, Nacional Financiera. Citibanamex successfully priced the product as a five-year MXN$4,000 million (US$229 million) bond on the Mexican debt market, receiving over MXN$13,000 million in investor demand. The proceeds will be used to fund a range of programs across the country, including small enterprise devel- opment, access to affordable housing, and energy efficiency to decrease utility costs for low-income households. These examples build on the contributions Citi has made in promoting the growth of social bonds over the past few years. In 2017, we co-led the placement of a $500 million social bond for the International Finance Corporation, that is designed to finance projects benefiting women-owned businesses and low-income communities in emerging markets. We also priced a $500 million, four-year Education, Youth and Employment (EYE) bond on behalf of the Inter-American Development Bank in 2014. To learn more about Citi’s efforts to promote the growth of other thematic bonds, including green and sustainability bonds, visit the Environmental Finance section. The industry also continues to use innovative financial instru- ments to hedge environmental risk. For example, catastrophe bonds (CAT bonds) were created in the 1990s following Hurricane Andrew. The destruction of the hurricane made it nearly impossible for many homeowners in Florida to obtain insurance. CAT bonds help policyholders by transferring the financial risk following natural disasters from the bond’s sponsor (traditional insurance and reinsurance companies) to the global capital markets. In mid-2017, Citi’s Banking, Municipal Securities and Capital Markets Origination teams completed their third Everglades catastrophe bond, raising Citi’s total issuance in the series to more than $2 billion in the past three years. The transaction, issued by Florida’s Citizens Property Insurance Corporation, is valued at $300 million and provides a fully collateralized source of reinsurance protection against any named storms that may occur over a three-year period. Citi 2017 Global Citizenship Report 91 CONTENTS    INTRODUCTION    HOW WE DO BUSINESS    SOLUTIONS FOR IMPACT     APPENDICES Environmental Finance    Inclusive and Resilient Communities