Major multilateral development banks have united to launch a global task force focusing on "debt-for-nature" swaps that aim to reduce the debt burden of developing nations in exchange for the protection of ecosystems.
The swaps involve acquiring a country's bonds, often at a reduced rate, and substituting them with more affordable eco-labelled bonds backed by specific guarantees from multilateral development banks.
The Inter-American Development Bank (IDB) and the U.S. International Development Finance Corporation (DFC) lead the initiative, with key participation from the Asian Development Bank (ADB), African Development Bank (AfDB), Agence Francaise de Developpement (AFD), European Investment Bank (EIB), Green Climate Fund (GCF), and Global Environment Facility (GEF).
This represents the task force’s biggest commitment to date to be involved in deals involving swaps, with trillions of dollars’ worth of potential investment.
CMS will be following this development closely as we acknowledge its potential to impact our clients in the debt capital markets.
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