As Barbados's debt price started to decline in the face of higher global interest rates, that gave the country the opportunity to
at a discount, and to use the savings — some $50 million, over the next 15 years — to protect its precious oceans.Barbados issued $150 million of new debt at almost a risk-free rate, thanks to guarantees from the AAA-rated Inter-American Development Bank and the AA-rated Nature Conservancy . It used the proceeds to buy back higher-yielding existing debt at 92 cents on the dollar, according to Slav Gatchev, the leader of TNC's sustainable debt team.
The new "blue bonds" are popular among impact investors, and have very close to preferred creditor status, since sovereign borrowers in the Americas never default to the IDB — "the de facto lender of last resort," as Gatchev puts it. If Barbados ever misses a payment, the IDB and TNC will pay the coupon instead — and immediately Barbados will owe them the money. Defaulting on this bond would effectively mean going into arrears to the IDB, and that is unlikely enough that TNC is happy to take the credit risk.grace period on payments in the event of a hurricane or other natural disaster.