Barbados is preparing to raise approximately $295 million with the sale of sustainability-linked debt as part of a debt-for-climate deal backed by two multilateral lenders.
The European Investment Bank will provide a $150 million guarantee for the transaction and the Inter-American Development Bank will back the rest, the European Commission said in a news release on Friday.
The Caribbean island nation could raise debt in the form of sustainability-linked bonds or a sustainability-linked loan in order to finance a upgrade of the island’s sewage treatment plant, said the Commission, which is the the European Union’s main executive body.
The investment will “advance the country’s efforts to mitigating the impacts of climate change, reducing chronic water shortages and improving wastewater systems,” the statement said.
Barbado’s Finance Minister Ryan Straughn told LatinFinance last month the government could close the debt-for-climate deal in the first quarter of 2024.
It follows the government debt-for-nature swap deal arranged by The Nature Conservancy in September last year that featured a $150 million blue loan from Credit Suisse and CIBC First Caribbean.
The latest deal will finance a revamp the country’s South Coast Sewage Treatment Plant and has three environmental components: helping replenish aquifers, providing water for agriculture and preserving the country’s remaining mangrove swamp.
“The total estimated cost for the upgrade is €100 million, which requires upfront financing,” the European Commission said.
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