Chubb Supports Debt Restructuring for Nature Project in BelizeLast modified:
Chubb Global Markets and Sovereign Risk Insurance Limited, a Chubb company, together with other private insurers, provided $300 million of reinsurance to the US International Development Finance Corporation (DFC) in an innovative political risk insurance transaction designed to help Belize reduce its external government debt and fund marine protection.
The insured transaction, a $364 million loan structured and arranged by The Nature Conservancy (TNC) and Credit Suisse, will enable the country to reduce its debt burden by around $250 million, and will generate an estimated $180 million for marine conservation over 20 years.
DFC provided approximately $610 million of political risk insurance (covering loan principal and interest) to support the transaction, thereby assuring the loan achieved an investment grade rating.
Due to the significant size of DFC’s exposure, private political risk reinsurance support was a critical component of the transaction.
DFC’s support for this project represents one of the most innovative examples of climate finance and a model for the future, as it reduces Belize’s indebtedness, generates investments in marine and biodiversity protection and promotes climate resilience in the country’s ‘blue’ economy.
With this loan, Belize is able to repurchase and retire a substantial portion of its external commercial debt, create significant annual cash flow for marine conservation through 2040, and establish an endowment to fund marine conservation for future generations.
This transaction represents the world’s largest debt-for-nature restructuring focusing on marine conservation to date and is the second transaction for TNC’s ‘Blue Bonds for Ocean Conservation’ program.
“The private political risk insurance market is delighted that we could support the DFC in such a meaningful way on this groundbreaking transaction,” said Price Lowenstein, President of Sovereign Risk Insurance. “This is an excellent example of public-private partnership that can serve as a template for future ‘blue’ debt financing. Not only are we helping to make a remarkable conservation project possible, but we are also supporting sustainable economic development and community resilience through critical debt relief.”