World’s first sovereign Blue Bond by Seychelles

Overview: The Republic of Seychelles has launched the world’s first Sovereign Blue Bond, a financial instrument designed to support sustainable marine and fisheries projects. With this, Seychelles became the first nation to pioneer such a novel financing instrument.

• The bond raised USD 15 million from international investors. The bond demonstrates the potential for countries to harness capital markets for financing the sustainable use of marine resources.

Key features and uses of the Blue Bond:

• The Blue Bond is a part of an initiative that combines public and private investment to mobilise resources for empowering local communities and businesses. It will greatly assist Seychelles in achieving a transition to sustainable fisheries and safeguarding oceans.
• The Seychelles blue bond is partially guaranteed by a USD 5 million guarantee from the World Bank (IBRD) and is further supported by a USD 5 million concessional loan from the Global Environment Facility (GEF) which will partially cover interest payments for the bond.
• Proceeds from the bond will be utilised for the expansion of marine protected areas, improved governance of priority fisheries and the development of the Seychelles’ blue economy.
• Proceeds from the bond will also contribute to the World Bank’s South West Indian Ocean Fisheries Governance and Shared Growth Program, which supports countries in the region to sustainably manage their fisheries and increase economic benefits from their fisheries sectors.
• Grants will be provided through the Blue Grants Fund and will be managed by the Seychelles’ Conservation and Climate Adaptation Trust (SeyCCAT).
• Loans will be provided through the Blue Investment Fund and will be managed by the Development Bank of Seychelles (DBS).

Facts for Prelims:

The Seychelles is an archipelagic nation consisting of 115 granite and coral islands in the Indian Ocean, off East Africa.

• As one of the world’s biodiversity hotspots, Seychelles is balancing the need to develop economically and protect its natural resources.
• After tourism, the fisheries sector is the most important industry in the country, contributing significantly to annual GDP and employing 17 percent of the population. Fish products make up around 95% of the total value of domestic exports.

Sources: the hindu.