Morgan Stanley announced today the issuance of a $1 billion social bond. According to the global financial services firm, proceeds from the offering will be allocated to affordable housing projects, which aim to provide housing at affordable rates to low- or moderate-income individuals and families in the United States.
Morgan Stanley Treasurer John Ryan, said:
“As the COVID-19 pandemic has unduly burdened many of our most vulnerable communities, affordable housing for individuals and families has never been more critical. The proceeds from this offering will help deliver and preserve housing solutions across the United States, and empower investors to make a positive social impact.”
Morgan Stanley stated that the social bond offering aligns with the firm’s ongoing strategy to advance market-based solutions to address sustainability challenges. The firm established the Morgan Stanley Institute for Sustainable Investing in 2013, with the goal of accelerating the mainstream adoption of sustainable investing. The Firm helped support the first ever corporate green bond in 2013, and in 2017, the Firm priced the first public market bond deal for a community development financial institution (CDFI) to help advance economic opportunity in underserved neighborhoods around the United States.
Tom Nides, Managing Director and Vice Chairman of Morgan Stanley, said:
“Morgan Stanley has a long standing commitment to harnessing the capital markets to strengthen communities and create opportunity. Financial innovations like the Morgan Stanley Social Bond are an important part of the solution to bring capital at scale to address critical challenges, including the growing need for affordable housing in our communities.”
The bonds were issued under Morgan Stanley’s newly published Social Bond Framework, which outlines the process through which the projects are selected. The framework establishes eligibility criteria for the use of bond proceeds, which include financing housing projects targeting low-income individuals or families that have individual or median family income that is less than 50% of relevant area median income (AMI), as well moderate-income individuals or families that have individual or median family income that is at least 50% and less than 80% of relevant AMI. In addition, proceeds may be used to revitalize low or moderate-income geographies, designated disaster areas, or distressed or underserved non-metropolitan middle-income areas.
According to the framework, eligible social projects are expected to directly contribute to SDG number 11 (Sustainable Cities and Communities), and to indirectly contribute to SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) through interlinkages between the social projects and a broader array of community services.