Blue Bonds

Why in news?

• SEBI has proposed the concept of blue bonds as a mode of sustainable finance, saying such securities can be utilized for various blue economy-related activities, including oceanic resource mining and sustainable fishing.

About Blue Bonds:

• A blue bond is a debt instrument issued by governments, development banks or others to raise capital from investors to finance marine and ocean-based projects that have positive environmental, economic and climate benefits.
  • Like the conventional bonds, investors lend money to a bond issuer, who agrees to repay the interest every year for the term of the bond plus the capital on a certain day.
• Similarly, in a blue bond, earnings are generated from the investments in sustainable blue economy projects.
• The issuance of a blue bond enables investors to fulfil their corporate social responsibilities and generate benefits for the ocean and humankind.
• The Republic of Seychelles launched the world’s first sovereign blue bond in 2018 raising a total of $15 million to advance the small island state’s blue economy.

Benefits of Blue Bond:

• It offers an opportunity for private sector capital to be mobilized to support the blue economy.
• It helps in raising awareness about important marine issues while providing much-needed funding to projects.
• It will catalyze progress towards SDG 14 (Life Below Water).

PRACTICE QUESTION

Consider the following statements:

1. Blue bond is a debt instrument issued to raise capital to finance marine and ocean-based projects that have positive environmental benefits

2. India is the first country to issue sovereign blue bond

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer