This article is part of a series spotlighting The Bond Buyer’s ten 2020 Deal of the Year award winners, running from December 9 through 15. One of these honorees will be chosen as our national Deal of the Year at a virtual event taking place December 16. For more information on the Deal of the Year winners and how to obtain a complimentary pass for the virtual event, click
The Bond Buyer chose the Ford Foundation’s $1 billion sale of taxable social bonds as the Deal of the Year winner in the Environmental, Social and Governance/Green financing category because it led the way in making the 'S' in ESG stand out.
“The transaction represented the first-ever social bond offering by a United States non-profit foundation in the taxable corporate bond market and led the way for numerous other non-profit foundations to follow suit,” The Bond Buyer said in its award announcement.
On June 18, the Ford Foundation came to market with the deal, which will provide funding for direct grants to non-profits pressured by economic fallout caused by the coronavirus pandemic.
Wells Fargo Securities priced the New York-based Foundation’s corporate CUSIP taxables (Aaa/AAA/NR/NR) at par to yield 2.415% in 2050 [34531XAB0] and 2.815% in 2070 [34531XAC8].
“The fact that these bond proceeds will be used to fund organizations that are working on building more inclusive capitalism, advancing operational justice, advancing reconciliation, improving police and community relations, I think that it is a very timely offering that converges with the social needs of this country in a very powerful and profound way,” said Darren Walker, president of the Ford Foundation.
“The non-profit sector in this country is challenged like never before … So this is the challenge we are attempting to address — at a time when we know organizations will need more and yet our endowment cannot produce that. We have made the decision that it would not be prudent to reduce our endowment, reduce our liquidity at this time.”
Sally Bednar, managing director at Wells Fargo, said the deal was structured as corporate CUSIP taxables because the foundation preferred very long-term debt.
“This is a big mission for social justice and racial equity,” said Giselle Valdez, vice president of public finance at Wells Fargo. “We are extremely excited to continue to work with the Ford Foundation and extremely excited to bring this in front of investors and really give the people the opportunity to almost pay it forward or give back by partaking in the deal.”
Walker said the time was right for such a bond sale. While there are many wealthy non-profits in the U.S, most do not have an endowment and many don’t even have six months of operating cash, he said.
“The non-profit sector in this country is challenged like never before. And for a foundation like Ford — which funds the arts, humanities, social justice organizations, organizations working on workers’ rights, human rights —these organizations we support are all challenged because of canceled fund-raisers, dark theaters, earned revenue down by in some cases by 90% and the forecast for the next 24 to 36 months for most of these organizations is dire,” Walker said.
