The return of Mr Sustainable Bond ..

So we meet again Mr Bond! However before we get to the real point on whether the Isle of Man has been Goldfingered lets first do a quick recap to remind readers who Mr Bond is and what mission he was assigned by M in September 2021.

What is Mr Bond and how was he structured?

Sustainable Bond Note ref ISIN XS2384582263 was listed by IOM Treasury on the sustainable segment of the Guernsey domiciled [The] International Stock Exchange on the 14th September 2021. This Bond is currently paying its investors a Coupon (or Interest rate) of some 1.625% per annum which will be paid semi annually until the 14th September 2051. The face value of this Bond was £400,000,000 (four hundred million pounds).

When launched in September 2021 subscriptions for the bond sold out very quickly and with the capital now raised IOM Treasury will in future be required to issue payments of £6,500,000 annually from its general revenue account to the Bond holders for the next thirty years - a total Coupon schedule of £195,000,000. There will also be the expectation that the Bond will be repaid on redemption (ie, that the investors will be returned their £400,000,000 by September 2051 on top of the Coupon they received) although this sort of debt could likely be restructured to push out repayment.

As stated at the time £595,000,000 sounds a lot to be repaid in total over thirty years. But the rate of 1.625% is probably a lot less than what IOM Treasury will earn on its existing investment portfolio over the next thirty years - so its undoubtedly cheaper raising this debt in the market than liquidating already invested capital reserves to raise capital.

What was the money raised for?

At the time of raising the capital Treasury commented that The Isle of Man has a clear commitment to net-zero emissions by 2050 and this fund raising will support the Island in staying at the forefront of the transition to a lower carbon economy. And in the run up to its launch in September 2021 an equally big song and dance was being made regarding our net-zero commitments with newly re-elected Daphne Caine then rapidly assigned to COP26 in Glasgow to sign all IOM taxpayers up to the net-zero cult. So the assumption to the casual reader might be that this finance was being raised to assist the Isle of Man to play its part in saving the world. But often its never as simple as that in the Isle of Man and in our original write-up in relation to Mr Bond we confirmed the general investment framework and speculated as to what the money might be spent on.

https://fearandloathing2021.wixsite.com/fearandloathingblog/post/my-name-is-bond-sustainable-bond

But how it was allocated was subsequently clarified in September 2022 via a little known publication that hides behind a dead hyperlink on The International Stock Exchanges listing page for ISIN XS2384582263.

This document can be found here:

https://www.gov.im/media/1377792/sustainablebondreport-2022-digital-v42_compressed.pdf

As we confirmed at the time there are effective investment restrictions in place on the listing and IOM Treasury was required to use the proceeds of the Bond solely to finance, or refinance, existing or future projects that allow Isle of Man to deliver environmentally and socially impactful projects in the following twelve key areas:

1. Clean Transportation

2. Renewable Energy

3. Energy Efficiency

4. Environmentally Sustainable Management of Living Natural Resources and Land Use

5. Water/Wastewater Management

6. Climate Change Adaptation

7. Access to Essential Services - Education

8. Access to Essential Services - Healthcare

9. Affordable Housing

10. Employment Generation and Support for SMEs

11. Socio-Economic Advancement and Empowerment

12. Affordable Basic Infrastructure

As we concluded at the time such an issue could be seen as largely an infrastructure blank cheque to finance, or re-finance, a wide range of suitably greenwashed Isle of Man government projects.

So where did IOM Treasury itself finally confirm that the £400,000,000 has been allocated?

Financed or re-financed?

In the above document it is evidenced that 64% (£254.20 million) of monies were allocated to re-finance existing projects and 36% (£145.80 million) was allocated to finance new projects.

On re-financing note that any eligible project embarked upon after 1st April 2018 was eligible to be re-financed via the bond funds so a lot of the projects in the re-financing category were historic in nature as this is simply re-broking monies already deployed to take advantage of a lower interest rate.

The Projects

The matrix below breaks down the projects either financed or re-financed into expenditure categories to show where the funds were allocated. Notes 1 to 20 in the above linked document, which can be read from page 9 onwards, then provide a written overview of the projects funded. We will leave it to the reader to assess whether any of these areas will assist the Isle of Man to meet its net-zero obligations, or for Manx folk to live more sustainable lives, but of particular note are the following:

Note 2: £69,200,000 on university grant schemes and nursery day care credits

Note 5: £37,700,000 on running the Isle of Man covid response

Note 6: £2,500,000 for digitising medical records

Note 8: £2,800,000 fannying around with unspecified active travel projects

Note 9: £80,000,000 to pay for the new SPC ferry

Note 11: £80,900,000 basically to pay covid support

Note 13: £3,200,000 to install smart meters

Note 14: £11,100,000 to give to MT to roll out fibre so they can charge you £60PM for fibre

Note 17: £23,000,000 to pay various social security benefits to 3,356 recipients

Note 19: £300,000 for new water testing facilities

Note 20: £200,000 to Ove Arup to carry out technical modeling for the Isle of Man wind-farm.

We also note that while this £400,000,000 was drawing down against the above the Isle of Man still had structural deficits in government spending during 2021, 2022, 2023 & 2024.

Pictured: Sean Connery in Goldfinger