Debt Swap to Finance Marine Conservation in the Seychelles
First of its kind impact investment deal between The Nature Conservancy, the Seychelles Government and the Paris Club.
Arlington, VA | February 26, 2015
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 $15.2 million in impact capital while raising an additional $5 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 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:
- Finance marine conservation and climate adaptation in the Seychelles
- Capitalize an endowment to finance work in the future
- Repay Impact Investors
The landmark agreement reached between Seychelles and its Paris Club creditors will trigger a US$31million 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 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 creditor participation in the agreement is 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.”
The Nature Conservancy launched its impact capital strategy in 2010 with support from the Robertson Foundation that continues today, and built a global network with subsequent support from the Jeremy & Hannelore Grantham Environmental Trust. In early 2014, with founding sponsorship from JPMorgan Chase & Co., NatureVest was launched as a concerted effort to change the way we invest in nature.
The Nature Conservancy is a global conservation organization dedicated to conserving the lands and waters on which all life depends. Guided by science, we create innovative, on-the-ground solutions to our world's toughest challenges so that nature and people can thrive together. We are tackling climate change, conserving lands, waters and oceans at unprecedented scale, and helping make cities more sustainable. Working in more than 65 countries, we use a collaborative approach that engages local communities, governments, the private sector, and other partners. To learn more, visit www.nature.org or follow @nature_press on Twitter.