First of its kind impact investment deal between The Nature Conservancy, the Seychelles Government and the Paris Club.
Arlington, VA — The Nature Conservancy through its NatureVest division will be supporting a first of its kind debt-swap deal between the Government of Seychelles and its Paris Club creditors in exchange for the Government of Seychelles’ commitment to enhance marine conservation and climate adaptation. The Nature Conservancy will invest $23 million in impact capital while raising an additional $8 million in grant funding for the first time to finance the deal.
The Seychelles, a nation of 115 islands in the Western Indian Ocean, with its low-lying geography, makes its people and economy particularly vulnerable to the threats of climate change.
The debt to be bought back by Seychelles from the Paris Club and South Africa at a discount-to-face-value under the terms of an unprecedented agreement reached on 25 February 2015 in Paris will be converted into new Government of Seychelles debt to be issued to the soon-to-be-created Seychelles Conservation and Climate Adaptation Trust (SeyCCAT). Over a 20 year period, the proceeds of this debt will be used to:
The landmark agreement reached between Seychelles and its Paris Club creditors will trigger a US$ 31 million funding package that will benefit critical marine conversation work in Seychelles, and follows three years of close interaction between the TNC, the Government of Seychelles, and its financial advisor, White Oak Advisory.
Seychelles’s debt buyback agreement with the Paris Club and South Africa is notable for a number of reasons, marking not only the first time the Paris Club has supported a debt operation designed to benefit the environment, but also the first time a southern creditor (South Africa) has participated in a buyback operation covering the debts of another southern country. Creditor participation in the agreement is also the highest ever achieved in a buyback deal reached through the Paris Club’s market-based window.
“This deal demonstrates the tremendous potential for impact investing to protect nature,” said Mark Tercek, President and Chief Executive Officer at The Nature Conservancy. “Through NatureVest, we are excited to bring together the Paris Club creditors and the Seychelles government to unlock a significant source of capital for marine conservation efforts that will help address climate change.”
The Nature Conservancy designed the debt-swap deal to allow the Seychelles to redirect a portion of their current debt payments from external creditors to fund conservation activities including the creation and management of over 400,000 square kilometers of new marine protected areas (the second largest in the Indian Ocean). The deal helps address the marine conservation and climate adaption goals announced as part of the “Blue Economy” theme at Rio +20 meeting held in 2012.
President James Michel of Seychelles thanked all of Seychelles’ partners and creditors who made the agreement possible, and who showed their confidence in the country. He further noted, “Although we are small, we can make a real difference. A difference that brings the best outcomes for Seychelles. And a difference that offers examples in terms of sustainable development, in terms of innovation, and in terms of options for all small island states.”
Through NatureVest, The Nature Conservancy aims to replicate this model to help other small island nations invest in marine conservation efforts that will limit the risks and costs posed by climate change.
Support for the Conservancy’s NatureVest team comes from the Robertson Foundation, the Jeremy & Hannelore Grantham Environmental Trust and JPMorgan Chase & Co.