Bank of America has announced the successful completion of a groundbreaking debt-for-nature transaction, marking a first in Continental Africa. This transaction involves the refinancing of $500 million of sovereign debt for the Gabonese Republic (“Gabon”). The outcome of this endeavor will allocate $125 million in fresh funding toward ocean conservation, aligning with Gabon’s commitment to safeguard 30 percent of its lands, freshwater systems, and oceans by 2030.
The health of the oceans holds immense significance for the global economy and the communities that depend on them for survival. According to the UN Conference on Trade and Development, the sustainable ocean economy is valued at nearly $3 trillion, constituting approximately 3 to 5 percent of the global GDP. Recognized by the United Nations (UN) Sustainable Development Goals (SDGs) as Goal 14, the conservation and sustainable use of oceans, seas, and marine resources is deemed paramount for sustainable development. Blue bonds serve as debt instruments issued by governments and development banks to raise capital from investors to support marine and ocean-based projects with positive environmental, economic, and climate benefits. Similarly, a Blue Loan directs its proceeds toward financing or refinancing initiatives contributing to ocean preservation.
Bank of America acted as the Sole Initial Purchaser, Structuring Agent, and Bookrunner for the issuance of $500 million, marking the initiation of a 15-year-long conservation and refinancing venture for Gabon. In tandem with this, Bank of America also fulfilled the role of Sole Dealer Manager for a tender offer, utilizing the proceeds from the new Blue Bond issuance to repurchase a portion of Gabon’s existing sovereign U.S. dollar-denominated Eurobonds.
The financial contributions from Gabon will be directed towards supporting an independent Conservation Fund, managed by The Nature Conservancy (TNC) as the project manager and technical advisor. Additionally, funds will be channeled into an endowment that will perpetuate conservation efforts even after the bond’s maturity. The U.S. International Development Finance Corporation (DFC) is offering political risk insurance for the Blue Loan to Gabon, enhancing the bond issuance’s credit rating and delivering debt relief over the subsequent 15 years. This transaction also represents the highest amount of new debt raised for a TNC-sponsored initiative.
Paul M. Donofrio, Vice Chair of Bank of America, commented, “As the first debt-for-nature transaction in Continental Africa, this transaction demonstrates Bank of America’s commitment to sustainable finance and our ability to innovate for our clients. We are encouraged by the enthusiastic response from the global investor community and hope this transaction will serve as a blueprint that can be scaled for other countries interested in improving the sustainability of their debt, while putting global capital to work in enhancing natural capital.”
H.E President Ali Bongo Ondimba of Gabon stated, “The launch of Gabon’s Blue Bond is an important moment, giving us hope that green or blue financial mechanisms will grow significantly in coming years and help countries like Gabon, who effectively protect critical ecosystems whilst also growing our economies.”
Bank of America’s collaboration with TNC, DFC, and the Gabonese Republic exemplifies its commitment to steer clients towards a more sustainable future through innovative investments. Bernard Mensah, President of International at Bank of America, asserted, “We are proud to be partnering with TNC, DFC, and the Gabonese Republic, to contribute to the growing blue bond market and ultimately increase the speed and scalability of future blended conservation deals.”
Jennifer Morris, CEO of The Nature Conservancy, emphasized the significance of the initiative, stating, “Gabon is the fourth Blue Bonds project for us and combines finance with science and marine planning expertise to help governments reach their conservation and climate goals while also supporting the well-being of their people and economies.”
Scott Nathan, CEO of DFC, highlighted the organization’s role in the transformative transaction, stating, “We are proud to contribute to this kind of innovative financing in Continental Africa, having supported similar efforts in Central and South America.”
Bank of America is committed to mobilizing and deploying $1.5 trillion by 2030 to advance sustainable development goals, with a focus on transitioning clients to a low-carbon future. This initiative reflects the model of raising conservation funding that promotes sustainable development while concurrently addressing national development priorities.
