Context

• The Republic of Seychelles has launched the world’s first sovereign blue bond—a pioneering financial instrument designed to support sustainable marine and fisheries projects.

About

• The bond was recently announced by the country’s Vice-President at the “Our Ocean Conference” in Bali. The business case for a sovereign blue bond was initially identified through support to Seychelles from the International Sustainability Unit of the UK’s Prince Charles.
• Marine resources are critical to the Seychelles economic growth. After tourism, the fisheries sector is its most important industry, contributing significantly to annual GDP and employing 17 per cent of the population. Fish products make up around 95 per cent of the total value of domestic exports.
• 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 channelling its proceeds.
• 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).
• The bond, which raised US$15 million from international investors, demonstrates 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: Calvert Impact Capital, Nuveen, and Prudential.
• 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.
  
  

Significance

• 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.
• 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 the oceans while sustainably develop their blue economy.
• It is a significant milestone in Seychelles long-standing support for ocean conservation and in developing national blue economies that protect the rich marine ecosystem while supporting economic growth, improved livelihoods and jobs.