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Bank of America Refinances Gabon Sovereign Debt

Staff writer
Aug. 15, 2023, 9:30 p.m.
2311

Word count: 696

Bank of America has completed a first of its kind debt-for-nature transaction in Continental Africa to refinance $500m of sovereign debt of the Gabonese Republic.

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Bank of America has completed a first of its kind debt-for-nature transaction in Continental Africa to refinance $500m of sovereign debt of the Gabonese Republic.

The transaction will enable the country to contribute $125m in new funding for ocean conservation, supporting their commitment to protect 30% of its lands, freshwater systems, and ocean by 2030.

“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,” said Paul M. Donofrio, vice chair of Bank of America.

Bank of America acted as Sole Initial Purchaser, Structuring Agent and Bookrunner on the $500m issuance, marking the start of what will be a 15-year-long conservation and refinancing project for Gabon.

As part of the transaction, Bank of America also acted as Sole Dealer Manager for a tender offer using the proceeds raised from the new Blue Bond issuance used to repurchase a portion of Gabon’s existing sovereign U.S. dollar-denominated Eurobonds.

The payments by Gabon will be partially used to fund contributions to an independent Conservation Fund (with TNC as the project manager and technical advisor) and pay into an endowment that will continue to fund conservation after the bonds are repaid. 

The U.S. International Development Finance Corporation (DFC) is providing political risk insurance for the Blue Loan to Gabon, which enhances the credit rating of the bond issuance and provides debt relief for Gabon over the next 15 years. This deal also represents the highest amount of new debt raised for a TNC-sponsored project. 

“DFC’s political risk insurance provided critical support for this historic transaction, helping to mobilize capital from institutional investors and catalyze additional investment in Gabon’s marine conservation efforts,” said DFC CEO Scott Nathan.

H.E President Ali Bongo Ondimba of Gabon, said: “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. All too often talk of these new mechanisms to reward countries like my own remain just that. In this case, thanks to the work of our partner, Bank of America, The Nature Conservancy, and the US International Development Finance Corporation, we have made it a reality. I call on Developed Nations and our Multilateral Banks to multiply these sorts of initiatives, which could make a significant contribution to addressing the critical challenges of Climate Change and Biodiversity Loss."

“As a global financial services organization, we are committed to helping lead our clients towards a more sustainable future by developing innovative investments that put global capital to work,” said Bernard Mensah, President of International at Bank of America. “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.”

“The Nature Conservancy’s Blue Bonds for Ocean Conservation program is an ambitious plan that aligns with national and international commitments to scale up ocean conservation around the world and address urgent biodiversity loss through improved ocean management”, said Jennifer Morris, CEO of The Nature Conservancy.

“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. Working with Bank of America, we are helping Gabon to ensure protection and management for 30 percent of its ocean – which brings us one step closer to TNC’s bold goal to conserve nearly 10 billion acres of ocean by 2030.”

In 2020, Bank of America set a goal to mobilize and deploy $1.5trn by 2030 to advance the sustainable development goals (SDGs) 193 countries agreed to in 2015, with $1trn of that focused on helping clients transition to a low-carbon future.

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