Bank of America Boosts Nature and Ocean Conservation

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KnowESG_Bank of America Boosts Nature and Ocean Conservation
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Bank of America proudly announces the successful execution of a groundbreaking debt-for-nature transaction within Continental Africa, effectively refinancing $500 million of sovereign debt for the Gabonese Republic (Gabon).

This landmark initiative will empower Gabon to channel $125 million into ocean conservation, underscoring its resolute commitment to safeguarding 30 per cent of its terrestrial regions, freshwater systems, and oceans by 2030.

The vitality of ocean ecosystems resonates as a linchpin of global economic prosperity and the sustenance of interconnected communities worldwide. According to the UN Conference on Trade and Development, the sustainable ocean economy encompasses an impressive $3 trillion, constituting approximately 3 to 5 per cent of the global GDP.

Acknowledged by the United Nations' Sustainable Development Goals as Goal 14, the preservation and sustainable utilisation of oceans, seas, and marine resources are pivotal facets of enduring developmental progress.

Bank of America assumes a significant role as the Sole Initial Purchaser, Structuring Agent, and Bookrunner for the $500 million issuance, signalling the commencement of a transformative 15-year conservation and refinancing initiative for Gabon.

This multifaceted endeavour also sees Bank of America as the Sole Dealer Manager orchestrating a tender offer using proceeds from the innovative Blue Bond issuance to facilitate the repurchase of a portion of Gabon's prevailing sovereign U.S. dollar-denominated Eurobonds.

Gabon's disbursements will be channelled to both an autonomous Conservation Fund (with TNC fulfilling the role of project manager and technical advisor) and an endowment designed to sustain conservation efforts beyond the bonds' redemption.

The U.S. International Development Finance Corporation (DFC) bolsters this commendable endeavour by furnishing political risk insurance for Gabon's Blue Loan, thereby enhancing the credit rating of the bond issuance and affording Gabon debt relief over the ensuing 15 years. Importantly, this agreement embodies the highest quantum of fresh debt procured for a TNC-sponsored initiative.

Paul M. Donofrio, Vice Chair of Bank of America, articulates, "In its capacity as Continental Africa's maiden debt-for-nature transaction, this milestone underscores Bank of America's unwavering dedication to sustainable finance and our adeptness in pioneering for our valued clients.

"The robust response from the global investor community heartens us, and we aspire for this breakthrough to serve as a blueprint with potential for replication, benefiting nations keen on enhancing debt sustainability while harnessing global capital to fortify natural capital."

H.E President Ali Bongo Ondimba of Gabon encapsulates the significance of Gabon's Blue Bond, asserting, "The unveiling of Gabon's Blue Bond marks a momentous juncture, imbuing us with optimism that green and blue financial mechanisms will burgeon in the years ahead, propelling countries like Gabon to effectively preserve critical ecosystems concurrent with advancing our economies.

"These novel mechanisms often linger as mere rhetoric, but thanks to the collaborative efforts of our partners—Bank of America, The Nature Conservancy, and the US International Development Finance Corporation—we have transformed vision into reality. I implore Developed Nations and Multilateral Banks to replicate such initiatives, which hold the potential to significantly address the pressing challenges of Climate Change and Biodiversity Loss."

Bernard Mensah, President of International at Bank of America, reinforces the institution's commitment to galvanising sustainable progress, expressing, "As a global financial services entity, we are resolute in steering our clients toward a more sustainable trajectory through innovative investments that galvanise global capital. Our collaboration with TNC, DFC, and the Gabonese Republic is a source of pride, amplifying the burgeoning blue bond arena and expediting the velocity and expansiveness of future blended conservation ventures."

Jennifer Morris, CEO of The Nature Conservancy, underscores the far-reaching scope of The Nature Conservancy's Blue Bonds for Ocean Conservation program, an ambitious stratagem that harmonises with both national and international imperatives to amplify ocean conservation globally and counteract urgent biodiversity depletion through elevated ocean stewardship.

Morris said, "The Gabon Blue Bond project, our fourth Blue Bonds endeavour, encapsulates finance, science, and marine planning expertise in a concerted drive to enable governments to actualise conservation and climate objectives while nurturing societal well-being and economic growth. In tandem with Bank of America, we are empowering Gabon to safeguard and manage 30 per cent of its ocean expanse—propelling us closer to TNC's audacious aspiration of conserving nearly 10 billion acres of ocean by 2030."

Scott Nathan, CEO of DFC, highlights the instrumental role played by DFC's political risk insurance in this historic transaction, catalysing capital inflow from institutional investors and sparking additional investments in Gabon's marine conservation initiatives.

Nathan asserts, "Our participation in this pioneering financial endeavour underscores DFC's adeptness in elevating a bond issuance's credit profile, thereby deepening capital markets. Just as with prior transactions in Belize and Ecuador, the Gabon Blue Bond exemplifies our capacity to bolster sustainable development while enhancing a nation's 'blue economy,' ultimately generating nearly $125 million for marine conservation over the forthcoming 15 years, a resolute stride towards safeguarding critical conservation goals, endangered species, and the nation's sustainable growth."

In 2020, Bank of America set forth an ambitious aspiration to mobilise and allocate $1.5 trillion by 2030 to expedite the United Nations' Sustainable Development Goals ratified by 193 nations in 2015, with a focus of $1 trillion on facilitating clients' transition towards a low-carbon future.

Between 2021 and 2022, the institution galvanised and deployed a cumulative sum of $410 billion in sustainable finance, with a substantial proportion—surpassing $235 billion—dedicated to propelling affordable clean energy initiatives and allied priorities. This pioneering transaction exemplifies a paradigm for raising conservation funds that simultaneously bolster sustainable development while propelling Gabon's marine economy towards a resilient and enduring future.

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Source: Bank of America

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