The Nature Conservancy (TNC) has announced that its NatureVest division will support a debt-swap deal between the government of the Seychelles and its Paris Club creditors in exchange for the government’s commitment to additional marine conservation and climate adaptation efforts. To that end, TNC will invest $23 million in impact capital while raising an additional $8 million to finance the deal.
The people and economy of Seychelles, an archipelago nation of 115 low-lying islands in the western Indian Ocean, are particularly vulnerable to the effects of climate change. To be purchased by the government of the Seychelles from the Paris Club and South Africa at a discount to face value, the debt will be converted into new government-issued debt in the name of the soon-to-be-created Seychelles Conservation and Climate Adaptation Trust (SeyCCAT). Over a 20-year period, the proceeds of that issuance will be used to finance marine conservation and climate adaptation efforts in and around the Seychelles, capitalize an endowment to finance future work, and repay investors.
The agreement follows three years of negotiations involving TNC, the government of the Seychelles, and the government’s financial advisor, White Oak Advisory. According to the conservancy, the debt buyback agreement not only marks the first time the Paris Club has supported a debt operation designed to benefit the environment but also the first time a southern creditor (ie South Africa) has participated in a buyback operation involving the debts of another southern country.
Click here to read the full press release, dated 26 February.
Source: Foundation Center, 4 March.