A charity is to raise £50million for vaccines in undeveloped countries by approaching the financial markets.

The International Finance Facility for Immunisation (IFFIm) will be issuing a bond via HSBC to raise the sum.

The bond will be redeemed after five years at which point it will also pay out a one-off coupon of 16.2%. HSBC says that the package works out as a return of 3% a year

This attempt by the IFFIm - overseen by the World Bank - is the latest by international health charities to tap into financial markets. Charities have been struggling for cash recently as governments scale back aid in the global financial crisis.

Max King, fixed-income strategist at Investec Asset Management, is unsure whether the return is as competitive as can be found but he added: "At least you know that the money is being put to good use. I would like to see the pension fund of every politician invested in these bonds. Then the world is a winner either way."

Because IFFIm is backed by legally binding 20-year pledges worth US$ 5.3 billion from the UK and other governments, its paper has been rated AAA by Fitch and Standard & Poor's. HSBC says that makes this issue safer and more attractive to investors than many others of the recent deluge of bond issues.

The money raised has been earmarked for the Geneva-based health charity GAVI Alliance, which has already saved 3.4 million lives by subsidising routine vaccinations in poor countries. Debt issuance is one way the charity industry aims to increase private sector contributions. The Global Fund for AIDS, TB and Malaria - the charity behind the Red Campaign backed by rock-star Bono - plans to issue Exchange Traded Funds in the summer to help plug a $4 billion funding shortfall.

The funds are portfolios of securities which track market indices such as the FTSE100. Unsurprisingly, the appetite for ETFs has already soared on Wall Street among investors looking for a safe home for their cash.

The Global Fund says without alternative funding it will not be able to buy badly needed treatments for diseases, such as malaria which kills 800,000 children every year. It has already been forced to cut spending on existing projects and delay applications for new ones.

The Global Fund is trying to persuade fund managers in London and New York to donate a proportion of every fee they earn.