Gabon Plans $700 Million Debt Swap to Fund Marine Conservation

(Bloomberg) -- Gabon is in talks with The Nature Conservancy to reorganize as much as $700 million of its eurobond debt to fund marine conservation in what may be the biggest transaction of its kind.

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TNC, a US-based conservation non-profit, will buy the bonds and then sell debt to Gabon at a lower interest rate and with a longer maturity, Lee White, the central African nation’s environment minister, said in an interview this week. The differential will be used to fund marine conservation at around $5 million a year for about 15 years and a fund will be created to finance programs after that date, he said. A final agreement is expected in the first quarter of next year.

The debt rearrangement will be the latest organized by TNC, which in September announced a $50 million deal with Barbados and last year concluded a $364 million transaction with Belize. The concept was pioneered in 2016 when The Nature Conservancy bought $21 million of debt held by the Seychelles.

“It’s TNC buying our debt and then using the profits that they might have generated from debt servicing to spend on conservation instead,” White said in the interview in London. “It’s been written into our finance law that’s currently in parliament and we presume it will go through without any problem.”

Gabon has $700 million of dollar-denominated debt falling due in 2025 and $599 million in 2029. White said he thought the bond to be bought by TNC was due in one of those years.

“The Nature Conservancy is looking at sovereign debt transactions as one way to help countries meet their conservation goals,” the organization said, declining to comment further.

Gabon has created 20 protected areas covering 26% of its marine waters, or 53,000 square kilometers (20,500 square miles). Those include the largest breeding populations of leatherback and olive ridley turtles, as well as 20 species of whales and dolphins.

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