Description
1. You are part of an advisory team in an investment bank that helps to develop a Social Impact Bond (SIB). Your team was given the task of developing a SIB based on one of the activities of the social enterprise Brigade, the United Kitchen apprentices programme.
The bank notified your team that the activities related to the programme will be run by the same organizations as specified in the report, but that the potential commissioner for the bond is the UK government.
As a first step in developing the SIB, you are asked to write a report that will introduce to the managers at your bank the plan for the bond. The report should include the following sections, which discuss:
(a) The details of the programme’s ‘theory of change’ that underpins the activities carried out. The provided report gives some details about the theory of change, but your managers in the bank expect to read a persuasive description of how the inputs are tied to the outputs, the outcomes and the impact;
(b) the indicators used to measure the inputs, activities and outcomes that are related to the objectives you selected (pay attention also to issues of dead weight, displacement and potential negative impacts of the project);
(c) details about monetizing the impact of the programme, based on the indicators selected and how to monetize the impact based on the benefits from the perspective of the UK government. Here, include both ‘hard’ and also ‘softer’ outcomes from the apprenticeship programme such as well being or skills development;
(d) the structure of the bond, including the performance targets to be met to trigger payments, and rates and timing of payments;
(e) potential risks associated with the bond. Here you are asked to include risks to all stakeholders, not only the investment bank.
You should write the report in clear, managerial language, but include references to sources using academic conventions (references in the text and a bibliographic list at the end of the assignment).
2. A week after you submitted the report, Belinda, Head of Investor Relations in your bank, sent you an email. In the email Belinda expressed concerns that securities analysts may not understand the social impact bond because the asset type is novel and not easily comparable to other tradable financial assets.
Write a report where you compare the SIB you designed with other assets we studied during the module (stocks, bonds, derivatives).
Explain the main similarities and differences between the SIB and these assets, according to risks and potential return and which investors are likely to be attracted to each asset and why. In addition, recommend ways that would attract securities analysts to cover the bond.
