Africa’s Seychelles Issues World’s 1st Blue Bond

By CultureBanx Team

  • Seychelles raises $15M in a 10-year blue bond

  • The nation’s fishing industry employs 17% of its population

The tiny island nation of Seychelles is the first country to sell debt earmarked specifically for ocean projects, raising $15 million in a 10-year blue bond. Nuveen, Prudential and Calvert Impact Capital are the three investors who bought the bond. Proceeds from the blue bond will be used to expand its protected marine areas, invest in fisheries and offer grants and loans to ocean-related industries.

Why This Matters: The Indian Ocean archipelago’s economy is dependent on the ocean and on fisheries for nutrition, livelihoods and other blue economy sectors like tourism. Seychelles’ fishing industry employs 17% of its population.

It’s backed by a $5 million guarantee from the World Bank, along with a $5 million concessionary loan from the Global Environment Facility.

The bond “will greatly assist Seychelles in achieving a transition to sustainable fisheries and safeguarding our oceans while we sustainably develop our blue economy”, said Vincent Meriton, vice-president of the Republic of Seychelles to the Financial Times.

As a new financial product the blue bond is the perfect amalgamation of commercial and non-commercial funding sources. It’s backed by a $5 million guarantee from the World Bank, along with a $5 million concessionary loan from the Global Environment Facility. Investors will receive a 6.5% annual interest.

This blue bond is modelled on the green- labelled debt which was pioneered by the World Bank and first emerged a decade ago and has since grown into a $150 billion a year market. Moody’s forecasts that between $175 billion and $200 billion of green bonds will be sold this year.

Situational Awareness: It is Seychelles’ second time branching off into environmental finance. Earlier this year the country created two new marine protected areas as part of a 2016 deal to write off $20 million of its debt.

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