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Abstract
Latham & Watkins lawyers, counsel to World Bank on the milestone transaction, discuss the creation of this new asset class and how the model can be adapted by other issuers By Latham & Watkins partner Paul Hunt and associates Aaron Franklin and Carlos Ardila On October 9 2018, the Republic of Seychelles launched the world’s first blue bond, a pioneering financial instrument designed to support sustainable marine and fisheries projects on the archipelago and in the waters comprising its exclusive economic zone. The progress of the green bond market has helped provide momentum for other thematic finance products, such as social bonds, sustainability bonds (addressing both environmental and social priorities), bonds linked to the United Nations’ Sustainable Development Goals, and loans of a similar variety. The proceeds from this blue bond were specifically earmarked to pay for three components of a larger strategy to advance the blue economy of the Seychelles: Expanded sustainable-use marine protected areas: investments in planning, implementing and enforcing the planned expansion of areas within the Seychelles’ exclusive economic zone subject to restrictions on fishing; Improved governance of priority fisheries: investments in finalising key fisheries management plans and building the institutional capacity to implement those plans; and Sustainable development of the blue economy: investments in developing greater value addition from the aquaculture, industrial, semi-industrial and artisanal fishing and processing sectors. [...]the World Bank needed to devise an innovative solution to retain its customary restrictions on the transfer of obligations that it guarantees.