Finance

Rhino Bond: Finance at the service of rhinos

The World Bank has just issued a bond issue of 150 million dollars intended to preserve the black rhinos in South Africa

This is, to say the least, an original bond issue. The World Bank has issued $150 million in “wildlife conservation bonds” – literally bonds for the preservation of wildlife – to finance the preservation of black rhinos in South Africa.

Fight against the disappearance of the species

It must be said that if these animals have seen their population melt at high speed, being particularly sought after by poachers for their horn. There were 65,000 in the world in the 1970s against only 2,600 today according to figures provided by the World Bank.

The objective of these “rhino bonds” is to finance the fight against poaching and the improvement of their living conditions. The funds raised will notably benefit two nature reserves located in South Africa: the Addo Elephant National Park (AENP) and the Great Fish River Nature Reserve (GFRNR).

Investors remunerated by a bonus

The issue price was 94.84% of the nominal amount. The bonds issued are zero-coupon bonds! Thus, investors who purchased these bonds will not receive coupons.

On the other hand, when the securities mature in 5 years, they will be reimbursed at 100% of the nominal amount invested with a bonus amount to be shared, provided that the population of black rhinos in the two selected reserves increases.

  • If the population of black rhinos in the two selected reserves does not increase, investors will not receive a bonus.
  • If the population increase of black rhinos in the two selected reserves is between 0% and 2% per year, investors will receive a bonus of almost $5.503 million, or an annual IRR of 1.80%.
  • If the population increase of black rhinos in the two selected reserves is between 2% and 4% per year, investors will receive a bonus of almost $11.007 million, or an annual IRR of 2.51%.
  • If the increase in the population of black rhinos in the two selected reserves is strictly greater than 4% per year, investors will receive a bonus of nearly $13.8 million, or an annual IRR of 2.85%.

This bonus will be paid by the Global Environment Fund, created during the Rio Earth Summit held in 1992. If this bond issue is a great success, there is no doubt that other “wildlife conservation bonds” could see the light of day, in particular to protect other endangered animal species, given the current context where more and more investors want to give more meaning to their investment.

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