Gabon launched what is set to be Africa’s first debt-for-nature swap on Tuesday, with a plan to buy up at least $450 million of its government debt and switch it to an eco-friendly blue bond.
Gabon’s beaches and coastal waters host the world’s largest population of leatherback turtles, with estimates putting it at nearly a third of the global population of the endangered species.
At their simplest, debt-for-nature swaps see a country’s debt bought up by a bank or specialist investor and replaced with cheaper ones, usually with the help of a multilateral development bank “credit guarantee” or “risk insurance”. The savings are intended to be used to fund conservation.
In a regulatory filling by the central African country on the London Stock Exchange, it said it had “launched invitations to tender for purchase by the Republic for cash its 2025 Notes and 2031 Notes”.
This prompted the three Eurobonds that it referred to rise as much as 2.2 cents on the dollar.
The February 2031 maturity rose 2.203 cents to 83.702 cents and November 2031 maturity jumped 2.129 cents to 83.573 cents, compared to Gabonese government’s offer to buy back the bonds for 85 cents per $1 of the bond.
The 2025 maturity rose 1.194 cents to 95.4 cents, also still below the offer price of 96.75 cents..
The deal has long been anticipated. Industry sources told Reuters this year that the U.S. International Development Finance Corporation (DFC) will provide political risk insurance as it has in similar recent deals in Ecuador and Belize.
Bank of America is helping to orchestrate the deal according to media reports.
A spokesperson for Gabon’s government did not immediately respond to a request for comment.
