Stockholm (NordSIP) – At the end of January, Alecta announced it had invested US$75 million in a Blue Bond issued by the government of Belize. The blue bond will contribute to better marine environments around the Central American country.
“The Belize Blue Bond meets our requirements for both long-term sustainability and good returns at a limited risk. The investment in the bond therefore fits well into our investment model,” says Ulrika Torell, senior portfolio manager at Alecta.
The blue bonds were issued by Platinum Securities as part of a sovereign debt restructuring and is secured by a loan to Belize from The Nature Conservancy (TNC). TNC is one of the United States’ oldest and largest environmental organisations with operations in several countries.
Belize’s Blue Debt Restructuring
The COVID-19 pandemic has been particularly damaging for countries that are extremely dependent on tourism as is the case with Belize. As economic activity grinded to a halt during the pandemic, tourism was one of the most affected sectors. According to data from the central bank of Belize, tourist arrivals fell by 71% between 2019 (1,517,588 visitors) and 2020 (441,586). As the country’s economy suffered, government debt jumped from just under 66% of GDP to 84.8% in the same period, forcing the government to restructure its debt.
As part of this process, Belize concluded a deal with a deal on November 5th, through which it bought back its only international bond, a US$553 million security, at 55 cents on the dollar.The buy-back transaction was funded with a US$364 million loan arranged by TNC.
The loan to Belize is insured by the United States International Development Finance Corporation (DFC). The Belize Blue Bond bond therefore receives the Aa2 credit rating from Moody’s. According to TNC, the deal represents “the world’s largest debt restructuring for marine conservation to-date”. Belize’s Blue bond is part of TNC’s “Blue Bonds for Ocean Conservation” program, part of an ambitious plan to drastically scale-up durable ocean conservation around the world.
“Conservation-driven debt conversions can give our partners a chance to jumpstart their economies and exponentially increase their conservation efforts,” said Jennifer Morris, CEO, The Nature Conservancy. “In Belize this will generate millions each year for the country to reinvest in conservation efforts that support the health of their marine life and of their people. The Nature Conservancy is happy to help Belize protect its valuable natural capital while reducing its debt burden, and we applaud the country’s leadership in demonstrating that this strategy can be an important solution for financing conservation around the world.”
“This deal is huge for Belize, especially during a tremendously difficult time for our economy, but its impact extends far beyond us as well,” said Prime Minister John Briceño on the occasion of the debt restructuring. “Blue Bonds will help us support the vibrant marine life that resides here, and maintain the rich biodiversity that is crucial for the health of our ecosystem and the planet. We are proud to be pioneers in this work, and to lead the way for other countries to join us as we conserve our oceans for Belize and beyond.”
Alecta’s Green and Blue Investment
Alecta has invested almost SEK75 billion in green bonds or other investments with measurable environmental or social benefits. This makes Alecta one of the world’s largest players in the field. Alecta was also the largest individual investor when the Swedish government issued a green bond in the autumn of 2020.
“When a bond like this is issued, the borrower is forced in a very structured way to define their green activities and green assets and set up processes for how these are to be financed and followed up. By being an early player and investor in this area, Alecta has contributed to the fact that there are more bonds of this type on the market today,” says Carina Silberg, Head of Corporate Governance and Sustainability at Alecta.
