In August 2023, the Government of Gabon, The Nature Conservancy and Bank of America announced the completion of the first ‘Debt-for-Nature’ transaction in mainland Africa and Africa’s first ever involving private creditors. The USD 500 million refinancing of Gabon’s sovereign debt will free up an expected USD 125 million for ocean conservation projects, supporting Gabon’s ambitious national effort to protect 30% of its lands, freshwater systems, and ocean by 2030. The transaction benefitted from political risk insurance of up to USD 500 million provided by the US International Development Finance Corporation which resulted in a Aa2 investment grade rating for the transaction. This attracted investors, enabled issuance of longer duration debt than would be typically achievable for Gabon, and lowered its interest payments. Bank of America acted as sole initial purchaser, structuring agent, and bookrunner on this debt-for-nature conversion.
This transaction will enable Gabon to make annual contributions to a conservation fund and endowment that will continue to fund conservation after the bonds are repaid. It forms part of Bank of America’s goal, announced in 2021, to mobilise and deploy USD 1.5 trillion in sustainable finance by 2030 of which USD 1 trillion is for the environmental transition.
Read more on Bank of America’s net-zero targets here.
This case study was originally published in the Net-Zero Banking Alliance 2023 Progress Update (December 2023).
Disclaimer: NZBA shares case studies to promote member banks’ awareness of new approaches, tools, products, services, and transactions related to financing the transition to net zero. Featuring a case study naming a particular bank does not represent an endorsement of all actions from that bank.