A new type of bond being issued by the World Bank will pay for successful efforts to protect critically endangered black rhinos in South Africa.
The World Bank priced the Wildlife Conservation Bond (WCB) in support of South Africa’s efforts to conserve endangered species. Also known as the “Rhino Bond,” this five-year $150 million Sustainable Development Bond includes a potential performance payment from the Global Environment Facility, which will contribute to protecting and increasing black rhino populations in two protected areas in South Africa, the Addo Elephant National Park and the Great Fish River Nature Reserve.
A statement by the Wolrd Bank said the WCB is a first-of-its-kind, outcome-based, financial instrument that channels investments to achieve conservation outcomes – measured in this case by an increase in black rhino populations.
“The Rhino Bond is a groundbreaking approach to enabling private sector investment in global public goods — in this case biodiversity conservation, a key global development challenge,” said World Bank Group President David Malpass.
“The pay-for-success financial structure protects an endangered species and strengthens South Africa’s conservation efforts by leveraging the World Bank’s infrastructure and track record in capital markets. Importantly, it can be replicated and scaled to channel more private capital for other conservation and climate actions and development objectives around the world.”
Investors in the WCB will not receive coupon payments on the bond. Instead, the issuer will make conservation investment payments to finance rhino conservation activities at the two parks. If successful, as measured by the rhino growth rate independently calculated by Conservation Alpha and verified by the Zoological Society of London, investors will receive a success payment at maturity, paid by the IBRD with funds provided by a performance-based grant from the GEF, in addition to principal redemption of the bond. This represents a new approach in conservation financing that passes project risks to capital market investors and allows donors to pay for conservation outcomes. Credit Suisse was the sole structurer and joint bookrunner with Citibank.
Stephen M. Liberatore, Head of ESG/Impact – Global Fixed Income at Nuveen said: “We are proud to be the lead investor in this innovative transaction that provided not only attractive total return potential, but also the direct and measurable outcomes we look for under our proprietary Impact Framework.
“We are especially hopeful that this type of public-private partnership can serve as a template for future transactions to help improve biodiversity globally.”
