Wall Street Can Help Improve Oceans, Belize Minister Says

(Bloomberg) -- Belize’s $364 million debt-for-nature swap deal in 2021 has become a successful case study that other countries can learn from, three participants in the transaction told a panel at the Bloomberg Green Summit in New York today.“Belize has proven it can be done,” said Kevin Bender, senior director of  sustainable debt at The Nature Conservancy. “We reduced debt burden overnight and there have been many successes in conservation so far. There were commitments to do things like move mangrove swamps to public lands and those have all been met.”

Debt-for-nature swaps are an emerging solution for the rising number of nations in distress, particularly those with ecosystems to protect. A country gets to avoid default and lower its debt burden, as long as it’s willing to earmark some of the savings to salvage a coral reef, preserve a forest or build a wind farm, among other examples. Global investors get enhanced green credentials, along with their returns, while Wall Street takes a cut. Big global banks are eying some of the world’s most fragile countries for this new experiment in financial engineering.

Jill Dauchy, founder and chief executive of Potomac Group, told the packed audience, “There are 59 countries most vulnerable to climate change, and of those, 34 [are] at high need for debt relief.” Potomac Group advised The Nature Conservancy in the deal.

Christopher Coye, minister of state in the Belize finance ministry, said there were learnings from the deal that could inform other nations. In particular, he said, it was important that targets laid out in the debt reduction agreement align with what the country being helped already has in mind.

The Belize transaction called for the nation to protect up to 30 percent of the waters off its coast — a goal the country intends to reach by 2026. Coye said that’s because it was already the country’s own national priority.

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