Seychelles Issues World’s First Blue Bond to Fund Fisheries Projects

Stingrays, which can be found in the Indian Ocean which
surrounds the Seychelles. This flattened fish is closely related to
sharks. The Seychelles has become the first country in the world to
issue a blue bond, focused on funding sustainable use of marine
resources. Credit: Nalisha Adams/IPS

By Kanis Dursin
JAKARTA, Oct 31 2018 (IPS)

The Republic of Seychelles announced on Monday that it has
issued a 10-year blue bond to finance fisheries projects, making it
the world’s first country to utilise capital markets for funding
the sustainable use of marine resources.

Seychelles Vice President Vincent Meriton told IPS that the bond
was officially issued Oct. 9 and that its sales have so far raised
15 million dollars from three institutional investors: Calvert
Impact Capital, Nuveen, and Prudential.

“At least 12 million dollars of the proceeds will be allocated
for low-interest loans and grants to local fishermen communities,
while the remainder will finance research on sustainable fisheries
projects,” Meriton told IPS in a telephone interview on
Sunday.

The news comes ahead of the first-ever global conference on the
blue economy, which will be held at the end of November in
Kenya.

Participants from around the globe will gather in the
country’s capital, Nairobi, and attend the Sustainable Blue Economy
Conference
to discuss ways of building a blue economy that
harnesses the potential of oceans, lakes and rivers and improves
the lives of all.

At the conference participants will also showcase latest
innovations, scientific advances and best practices to develop
economies while conserving the world’s waters.

The Seychelles’ blue bond will likely be a mechanism of great
interest to participants.

“We are honoured to be the first nation to pioneer such a
novel financing instrument,” Meriton said when announcing the
bond on the first day of the Our Ocean Conference in Nusa Dua,
Bali, a one-hour flight east of the Indonesian capital Jakarta.

“The blue bond, which is part of an initiative that combines
public and private investment to mobilise resources for empowering
local communities and businesses, will greatly assist Seychelles in
achieving a transition to sustainable fisheries and safeguarding
our oceans while we sustainably develop our blue economy,”
Meriton continued.

Grants and loans to Seychelles fisher communities would 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).

An archipelagic country in the western Indian Ocean, Seychelles
has 115 granite and coral islands spreading across an exclusive
economic zone of approximately 1.4 million square kilometers.

After tourism, the fisheries sector is the country’s most
important industry, contributing significantly to annual GDP and
employing 17 percent of the population, with fish products
accounting for around 95 percent of the total value of domestic
exports.

From right to left: Nico Barito (Seychelles Consular General to
Indonesia), Vincent Meriton (Seychelles Vice President), Laura Tuck
(World Bank Vice President), James Michel (Former Seychelles
President), and Justin Mundy (World Resources Institute and former
director of HRH The Prince of Wales’ International Sustainability
Unit). Courtesy: Nico Barito

According to Meriton, the idea of a blue bond was first floated
under former president James Michel in 2011, but the concept for a
blue bond to support a transition to sustainable fisheries was
conceived in 2014 only with the help of HRH The Prince of Wales’
International Sustainability Unit.

Since then, a World Bank team comprising experts from its
Treasury, Legal, Environmental and Finance groups has worked with
investors, structured the blue bond, and assisted the Seychelles
government in setting up a platform for channeling its
proceeds.

A joint statement issued by the Seychelles government and the
World Bank said the blue bond is backed by a five million dollar
guarantee from the World Bank and a five million dollar
concessional loan from the Global Environment Facility (GEF). It
will also pay an annual coupon of 6.5 percent to investors, but the
GEF concessional loan would cut the cost to Seychelles to 2.8
percent.

The statement also said proceeds from the bond sales would
finance the expansion of marine protected areas, improved
governance of priority fisheries and the development of the
Seychelles’ blue economy, and 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 fisheries and increase economic benefits from their
fisheries sectors.

World Bank Vice President and Treasurer Arunma Oteh called the
blue bond a milestone that complements other activities aimed at
supporting sustainable use of marine resources, including
particularly the fishery sector.

“We hope that this bond will pave the way for others …. The
blue bond is yet another example of the powerful role of capital
markets in connecting investors to projects that support better
stewardship of the planet,” Oteh said in a joint statement.

World Bank Vice President of Sustainable Development Laura Tuck
said the blue bond could serve as a model for other countries in
mobilising funds to finance sustainable fisheries projects.

“The World Bank is excited to be involved in the launch of
this sovereign blue bond and believes it can serve as a model for
other small island developing states and coastal countries. It is a
powerful signal that investors are increasingly interested in
supporting the sustainable management and development of our oceans
for generations to come,” Tuck said.

SeyCCAT Chief Executive Officer Martin Callow was quoted as
saying that the bond would support the country’s ambitions to
create a diversified blue economy.

“We are privileged to be working with the many partners
involved in this unique transaction, and we are excited about the
possibilities to back pre-development and growth stage projects in
support of Seychelles’ blue economy. With these new resources,
our guiding principles, and the blended finance structure that we
have developed, we will support Seychelles’ ambitions to create a
diversified blue economy and, importantly, to safeguard fisheries
and ocean ecosystems,” said Callow.

Daniel Gappy, CEO of DBS, expressed similar sentiments and vowed
to support the government’s quest for sustainable development.
DBS will co-manage proceeds from the bond via the creation of the
Blue Investment Fund.

“Establishing the Blue Investment Fund will bring additional
exposure both locally and internationally for the bank and will
provide opportunities to enhance our competency in fund management
for positive environmental, social and governance outcomes,” said
Gappy.

Meanwhile, Pietra Widiadi, Green and Blue Economy Strategic
Leader at World Wildlife Fund (WWF) Indonesia, said the blue bond
offers huge potential as an alternative financing source, but many
things need to be done to ensure the projects achieve their
targets.

“Awareness on the importance of the blue economy is still
relatively low in island nations, especially those in the south.
For that reason, I think any blue bond project should start with
building the capacity of people involved,” Widiadi told IPS.

Indonesia and other island nations, Widiadi said, could use
Seychelles’ blue bond structure as a model in tapping the bond
market for financing sustainable fishery and marine projects.

“Projects funded with blue bond, just like green bond, are
rigidly regulated, but Seychelles’ blue bond can serve as a model
on how we can move forward,” he said.

Edo Rakhman, a national coast and ocean campaigner for the
Indonesian Forum for Environment or Walhi, a leading civil society
organisation that champions environmental issues, hailed the
world’s first blue bond but stressed that any sustainable fishery
and marine project should start with protecting the rights of local
fisher communities and mangroves along coastal areas.

“Island nations should designate fishing grounds or zones
where all forms of extractive activities are prohibited and
mangroves protected to ensure the sustainability of fish stock for
local fishermen communities,” Edo said.

The post
Seychelles Issues World’s First Blue Bond to Fund Fisheries
Projects
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Source: FS – All – Ecology – News
Seychelles Issues World’s First Blue Bond to Fund Fisheries Projects