How Standard Chartered Debt Deal Will Help Nature in Bahamas
Marine conservation in the Bahamas could benefit to the tune of US$124m – thanks to a unique debt conversion deal set up by Standard Chartered.
In a project of firsts, both for the bank and for the industry at large, Standard Chartered acted as the sole lender, underwriting a new US$300m loan.
The Group said: “This demonstrates the strength of our commitment to sovereign clients, sustainability and the development of this asset class.”
The gift that keeps giving
By buying back US$300m of its external commercial debt, through the new loan funded by Standard Chartered, The Bahamas is expected to generate US$124m for marine conservation.
An endowment, expected to grow to US$20m by 2039, will continue funding marine conservation in The Bahamas beyond the project’s 15-year term.
A press release from Standard Chartered said: “This will support The Bahamas to effectively manage its unique system of almost 6.8 million hectares of Marine Protected Areas, complete a national Mangrove Management Plan and develop and implement a Marine Spatial Plan aimed at addressing increased demands for the use of The Bahamas’ ocean using a transparent, participatory and science-based process.
“Enhancing conservation and management of these areas can help protect extensive coral reefs, seagrass meadows and mangrove forests – all of which provide critical habitats for diverse species, protect coasts from storms and sustain local livelihoods.”
The Nature Conservancy, the world’s largest conservation organisation, mobilised the guarantee package for the transaction and will be providing long-term conservation support to the government.
Deep and energising collaboration
The deal has been warmly welcomed by senior executives at Standard Chartered and raised hope for future transactions of this type.
Marisa Drew, Standard Chartered CSO, said: “This announcement is the result of months of deep and energising collaboration between the Government of The Bahamas, Inter-American Development Bank, The Nature Conservancy, Builders Vision, AXA XL and several other partners, to jointly unlock US$124 million in funding over the next 15 years for marine conservation in The Bahamas.”
Marisa added: “This transaction is innovative for many reasons, not least because this is the first time a family office, Builders Vision, has played a significant role in a sovereign debt conversion by providing an important component of the transaction's credit enhancement package.
“The arrival of new entrants in this space, and the efficiencies being created each time transactions like these are executed, creates an exciting opportunity to replicate, scale and deliver impact in other markets across our footprint.
"A huge thank you and hearty congratulations to all those across the Bank, and our partners, for coming together to deliver this innovative solution for The Bahamas.”
Sunil Kaushal, Co-Head, Corporate & Investment Banking, Standard Chartered, said: “Sovereign debt solutions like these create vital fiscal space and help shift financial flows towards sustainable outcomes, which is a priority for us.”
His thoughts were echoed by Faruq Muhammad, Global Head of Development & Agency Finance, Standard Chartered, who said: “We see a significant opportunity to scale these types of transactions across our markets.
“Our blended finance expertise and the diversity of our teams means we are poised to replicate this.”
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