In 2018, the Republic of Seychelles launched the world’s first sovereign blue bond to finance sustainable fishing practices and marine protection.
The bond benefits from two credit enhancement instruments: a partial guarantee by the World Bank (IBRD) of $5 million, and a concessional loan of $5 million from GEF, which partially subsidises the bond’s interest payments from 5.5 to 2.8 percent. The bond was privately placed with three private investors: Nuveen, Prudential and Calvert Impact Capital.142 The majority of the transaction costs for the bond were covered by the Rockefeller Foundation.143 Standard Chartered Bank and Bank of New York Mellon assisted in the process and payments.144
The proceeds will finance the sustainable transition of small-scale fisheries (the Mahe Plateau Demersal Fisheries Management), including the rebuilding of fish stocks, harvest control and complement marine projects. Furthermore, it provides additional funding for the continued development of Seychelles EEZ marine spatial plan, the World Bank SWIOFish 3 project, and the allocation of 30 percent of marine protected areas for Debt Swap for Conservation and Climate Adaptation.145 Being the first of its kind, the Seychelles’ Blue Bond can serve as a replicable model for other Small Island Developing States, that are seeking to increase the adaptability and resilience of local communities, and protect marine ecosystems.
142 ‘Sovereign Blue Bond Issuance: Frequently Asked Questions’. 2018. World Bank. 29 October 2018. https://doi.org/10/29/sovereign-blue-bond-issuance-frequently-asked-questions.
143 ‘Seychelles: Introducing the World’s First Sovereign Blue Bond – Mobilizing Private Sector Investment to Support the Ocean Economy’. 2019. The World Bank. http://pubdocs.worldbank.org/en/242151559930961454/Case-study-Blue-Bond-Seychelles-final-6-7-2019.pdf.
144 ‘Seychelles: Introducing the World’s First Sovereign Blue Bond – Mobilizing Private Sector Investment to Support the Ocean Economy’. 2019. The World Bank. http://pubdocs.worldbank.org/en/242151559930961454/Case-study-Blue-Bond-Seychelles-final-6-7-2019.pdf.
145 ‘Innovative Ocean Financing: Seychelles Blue Bonds’. n.d. Food and Agriculture Organization of the United Nations. http://www.fao.org/blogs/blue-growth-blog/innovative-ocean-financing-seychelles-blue-bonds/en/.