The International Bank for Reconstruction and Development, a subsidiary of the World Bank Group, has issued a $150 million animal welfare bond, the Washington DC-based institute said late Wednesday night.
The "Rhino Bond" has a term of five years and benefits the conservation of South African black rhino populations, the Addo Elephant National Park and the Great Fish River Conservation Area.
Gregory Bruner
Editor in Business.
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Unlike traditional bonds, the Nashorn bond does not have a regular interest coupon.
Instead, the World Bank pays amounts to the parks mentioned, where the money is to be used to protect the animals there.
If the rhino stocks in the parks have grown at the end of the term, investors will receive a success payment in addition to the investment amount.
This is fed by grants from the Global Environment Facility, an international mechanism for financing environmental protection projects in developing countries.
According to the World Bank, this represents a new approach to financing conservation projects that leaves project risks to the capital market and allows donors to pay for conservation results.
“The Animal Welfare Bond is a first-of-its-kind outcome-based financial instrument that channels investment to promote conservation.
Success is measured by the increase in black rhino populations,” the World Bank said.
The success is checked by the London Zoological Society.
If successful, the program could expand to other rhino populations, as well as species such as lions, tigers, gorillas and orangutans.
The bond was issued at 94.98 percent of its total principal amount of $150 million.
The maximum success payment is given by the World Bank at around 13.8 million dollars.
The major Swiss bank Credit Suisse structured the bond and was joint lead manager with the American Citibank.