Gabon clutches $500m blue bond refinance deal

The government of Gabon and The Nature Conservancy (TNC), have announced  an innovative financial blue bonds deal to refinance $500 million the country’s national debt, thereby unlocking an expected $163 million in new funding that would be transformative for ocean conservation in new funding dedicated to ocean conservation, a statement said.

The project is the most recent in The Nature Conservancy’s blue bonds for Ocean Conservation strategy, which plans to scale up ocean conservation around the world. Gabon is the global conservation organisation’s fourth Blue Bonds project, alongside those in Barbados, Belize and Seychelles.

Notably, this marks the first-ever “debt-for-nature” transaction in sub-Saharan Africa and will help fulfil Gabon’s global commitment to protect 30 percent of the country’s lands, freshwater systems and ocean by 2030.

The  announcement highlights the financial closing of this debt conversion, marking the start of what will be a 15-year-long conservation project for Gabon. As part of the transaction, proceeds from a new bond issuance, arranged by Bank of America, were used to refinance a portion of Gabon’s existing national debt.

The US International Development Finance Corporation said it is providing political risk insurance for the financing, which lowers the cost of debt for Gabon . The transaction will enable the country to make annual contributions to an independent Conservation Fund, and also pay into an endowment that will continue to fund conservation after the bonds are repaid.

Those contributions would total $5million each year over the next 15 years for conservation action and also create an endowment expected to grow to approximately $88 million by 2038, thereby creating a source of sustainable finance to fund conservation of the Gabon Ocean ecosystem in perpetuity.

Speaking after the deal, Ali Bongo Ondimba, the Gabonese president described the launch of Gabon’s blue bond as an important moment, giving the  hope that green or blue financial mechanisms will grow significantly in coming years and help countries like Gabon, who effectively protect critical ecosystems whilst also growing their economies.

“All too often talk of these new mechanisms to reward countries like my own remain just that. In this case, thanks to the work of our partner, The Nature Conservancy, and the US International Development Finance Corporation , we have made it a reality,”he added.

President Ondimba called on developed nations and multilateral banks to multiply these sorts of initiatives, which could make a significant contribution to addressing the critical challenges of climate change and biodiversity loss.

Jennifer Morris, CEO of The Nature Conservancy, said the blue bonds programme combines finance with science and marine planning expertise to help governments reach their conservation and climate goals while also supporting the well-being of their people and economies.

“This project in Gabon unlocks an enormous stream of funding for conservation created by the issuance of new bonds, which was made possible with political risk insurance from the US International Development Finance Corporation,” Morris said.

She added that it is among a growing number of innovative financial opportunities advancing both biodiversity and climate goals for people and nature.