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Seychelles Debt Restructuring for Marine Conservation and Climate Adaptation

An explanation of the deal flow behind the Seychelles Debt Restructuring
by

NatureVest

on 10 June 2016

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Transcript of Seychelles Debt Restructuring for Marine Conservation and Climate Adaptation

Seychelles Debt Restructuring for
Marine Conservation &
Climate Adaptation
Deal Flow:
Explained

Impact Investors, Grant Funding
Funding for the Program of Activities
Capitalize Endowment
(EV $6.6 M)
Current Situation:
Annual Debt
Service Payments
The Seychelles, like many Large Ocean Developing States
*
, has very high debt burdens, limiting its ability to invest in much needed conservation and climate adaptation activities. It currently makes debt
payments to a number of creditor countries, convened by the Paris Club
**
.

The Nature Conservancy, through its NatureVest
*
division, brokered a deal with the Paris Club creditors and the Government of Seychelles to convert over 21M of of Seychelles' debt to other countries into more manageable debt held by private parties, in exchange for greater ocean protection and and climate change adaptation.
The Conservancy will combine $15.2M of impact capital and $5M of grant funding for a total of $20.2M that will be transferred to the newly created SeyCCAT
*
.
Impact Investors, Grant Funding
$15.2M
impact capital
$5M
grant funding
Seychelles Conservation & Climate Adaptation Trust
(SeyCCAT)
Seychelles Conservation & Climate Adaptation Trust
(SeyCCAT)
SeyCCATT will loan the $20.2 million it received from the combination of impact capital and grant capital, from The Nature Conservancy, to Government of Seychelles.
Seychelles
(Debtor)
Seychelles Conservation & Climate Adaptation Trust
(SeyCCAT)
1st Note: $15.2M
2nd Note: $6.4M
In order to fund their marine conservation and climate adaptation work, Government of Seychelles will reissue two New Promissory Notes to SeyCCAT. The first for $15.2M, at 3% over 10 years, and the second for $6.4M at 3% over 20 years.
Seychelles
(Debtor)
Seychelles
(Debtor)
Seychelles Conservation & Climate Adaptation Trust
(SeyCCAT)
Impact Investors
3% for 10 years

SeyCCAT will use the proceeds from the new notes to repay TNC's impact loan at 3% over 10 years, for a total of $17.7M.
Seychelles Conservation & Climate Adaptation Trust
(SeyCCAT)
Impact Investors, Grants
$15.2M impact capital
$5M grant funding
1st Note:
$15.2M
2nd Note:
$6.4M
Purchase of debt
for $20.2M
Loan of
$20.2M
Transfer of
$21.6M

of debt

Seychelles
(Debtor)
Loan of
$20.2M

The Government of Seychelles will take the $20.2 million loaned by SeyCCAT, and buy back $21.6M of their debt from the Paris Club creditors, at a rate of 93.5 cents on the dollar.
Paris Club
(Creditors)
France, Belgium, UK, Italy
Seychelles
(Debtor)
Purchase of debt
for
$20.2M

Transfer of
$21.6M

of debt

Seychelles Conservation & Climate Adaptation Trust
(SeyCCAT)
Funding for the Program of Activities
Capitalize Endowment
(EV $6.6 M)
$5.6

M

$3M

SeyCCAT will pay for on-the-ground ocean conservation and climate adaptation every year for 20 years, while also building an endowment that support that work into the future.
*Large Ocean Developing States (LODS)
are low-lying coastal countries that tend to have small but growing populations, limited resources, susceptibility to natural disasters and fragile environments.
**The Paris Club
is a forum for countries to negotiate and manage sovereign debt. Creditor countries in this deal are: France, Belgium, UK and Italy.
*NatureVest
creates and transacts investable deals that deliver conservation results and financial returns for investors.
*Seychelles Conservation and Climate Adaptation Trust
was established to manage a sustainable flow of funds to support the long-term management and expansion of the Seychelles’ system of protected areas and other activities which contribute substantially to the conservation, protection and maintenance of biodiversity and adaptation to climate change.
(at 3% for 10 years)

1st Note:
$15.2M

Total value =
$17.7M

2nd Note:
$6.6M
Disburse $280K/year
in local currency
for 20 years
Invest $150K/year
for 20 years at 7% compounding interest.
Paris Club

(Creditors)
3% for 10 years

Total value =
$17.7M

(at 3% for 10 years)

$5.6

M

Disburse $280K/year
for 20 years
1st Note: $15.2M
2nd Note: $6.4M
$3M

Invest $150K/year
for 20 years at 7% compounding interest.
Paris Club

(Creditors)
Full transcript