Bahamas Government Launches Debt Conversion Project to Save Millions and Enhance Ocean Conservation

Bahamas Government Launches Debt Conversion Project to Save Millions and Enhance Ocean Conservation

The Bahamas government has launched a new debt conversion project that will save it an estimated US$124 million over the next 15 years and enable it to improve ocean conservation and management of the Bahamas Protected Areas System.

The project, supported by the Inter-American Development Bank (IDB), The Nature Conservancy (TNC)’s Nature Bonds Programme, and other partners, allowed the government to buy back US$300 million in external debt with proceeds from a new US$300 million loan arranged by Standard Chartered Bank.

Endowment to Fund Marine Conservation

An endowment, expected to grow to US$20 million by 2039, will continue funding marine conservation in The Bahamas beyond the debt conversion project’s 15-year term.

New Financing Benefits

The new financing benefits from a comprehensive guaranteed package: a US$200 million credit guarantee from the IDB, a US$70 million co-guarantee from Builders Vision, and US$30 million credit insurance from AXA XL.

Conservation Funding Managed by Bahamas Protected Areas Fund

The Bahamas Protected Areas Fund (BPAF) will manage the conservation funding generated by the deal. Rothschild & Co advised the Bahamas government.

Government’s Commitment to Ocean Conservation

“Since 1958, The Bahamas has led ocean conservation by establishing the Exuma Land and Sea Park. Our nation is taking another ambitious step with an economic program that promotes ocean conservation and benefits local communities,” said Rochelle Newbold, Director of The Bahamas Climate Change and Environmental Advisory Unit.

Objectives of the Debt Conversion Project

The Bahamas debt conversion project will provide critical funding for initiatives supporting the effective management of The Bahamas’ ocean area, capacity building, and technical support. Commitments under this project include:

Effective marine protected area (MPA) management with climate-smart plans
Completing a national Mangrove Management Plan to preserve vital habitats like coral reefs, seagrass meadows, and mangrove forests

About the IDB

The IDB supports institutional strengthening policies for environmental and public debt management in the country. It said that this operation will help the country improve its macroeconomic stability, strengthen its environmental governance for sustainability and biodiversity protection, and enhance its institutional debt management framework.

About TNC’s Nature Bonds Programme

TNC’s Nature Bonds Programme is a holistic approach to leveraging debt refinancing, combined with science, planning, and policy, for practical and durable conservation and climate action supporting communities.

Conclusion

The Bahamas debt conversion project is an innovative approach to conserving marine and coastal ecosystems and their sustainable management. The project demonstrates the potential for debt conversions, with the right conservation commitments and technical assistance, to be an effective market-based solution for countries seeking to address the dual crises of the climate emergency and biodiversity loss.

FAQs

What is the purpose of the Bahamas debt conversion project?
The project aims to save the Bahamas government an estimated US$124 million over 15 years and improve ocean conservation and management of the Bahamas Protected Areas System.
Who are the partners involved in the project?
The project is supported by the Inter-American Development Bank (IDB), The Nature Conservancy (TNC)’s Nature Bonds Programme, and other partners.
What is the endowment expected to grow to by 2039?
The endowment is expected to grow to US$20 million by 2039.
What is the comprehensive guaranteed package?
The guaranteed package includes a US$200 million credit guarantee from the IDB, a US$70 million co-guarantee from Builders Vision, and US$30 million credit insurance from AXA XL.