The Republic of Seychelles launched, in late October, the world’s first sovereign blue bond, according to data provided by The World Bank. The bond, which raised US$15 million from international investors, is a pioneering financial instrument designed to support sustainable marine and fisheries projects, demonstrating the potential for countries to harness capital markets for financing the sustainable use of marine resources.
The World Bank assisted in developing the blue bond and reaching out to the three investors, comprising Calvert Impact Capital, Nuveen, and US-based Prudential Financial, Inc.
Proceeds from the bond will include support for the expansion of marine protected areas, improved governance of priority fisheries and the development of the Seychelles’ blue economy. Grants and loans will be provided through the Blue Grants Fund and Blue Investment Fund, managed respectively by the Seychelles’ Conservation and Climate Adaptation Trust (SeyCCAT) and the Development Bank of Seychelles (DBS).
We are honored to be the first nation to pioneer such a novel financing instrument. The blue bond, which is part of an initiative that combines public and private investment to mobilize resources for empowering local communities and businesses, 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 at the Our Ocean Conference in Bali, announcing the blue bond.
Seychelles is an archipelagic nation consisting of 115 granite and coral islands. It has a land area of 455 km2 spread across an Exclusive Economic Zone of approximately 1.4 million km2. As one of the world’s biodiversity hotspots, Seychelles is balancing the need to both develop economically and protect its natural endowment. Marine resources are critical to the country’s economic growth. After tourism, the fisheries sector is the country’s most important industry, contributing significantly to annual GDP and employing 17% of the population. Fish products make up around 95% of the total value of domestic exports.
The Seychelles blue bond is partially guaranteed by a US$5 million guarantee from the World Bank (IBRD) and further supported by a US$5 million concessional loan from the GEF which will partially cover interest payments for the bond. Proceeds from the bond will also contribute to the World Bank’s South West Indian Ocean Fisheries Governance and Shared Growth Program, which supports countries in the region to manage their fisheries in sustainable way and increase economic benefits from their fisheries sectors.
A World Bank team comprising experts from its Treasury, Legal, Environmental and Finance groups worked with investors, structured the blue bond and assisted the Government in setting up a platform for channeling the proceeds. The business case for a sovereign blue bond was initially identified through support to Seychelles from HRH Prince of Wales’ Charities International Sustainability Unit.
Standard Chartered acted as placement agent for the bond and Latham & Watkins LLP advised the World Bank as external counsel. Clifford Chance LLP acted as transaction counsel.
I’m pleased we’ve reached such a milestone. This sovereign blue bond complements ongoing efforts in our portfolio of activities in the country aimed at supporting sustainable use of marine resources, including particularly the fishery sector, which accounts for a large portion of the country’s GDP, along with tourism.
…Mark Lundell, World Bank Country Director for Seychelles, Mauritius, Madagascar, Comoros, and Mozambique, stated.