Product Example - Rainforest CO2 Reduction (CLN)
This product offers the opportunity to participate in a unique and attractive ESG investment project with a fixed return of 7.5% per annum plus a 'kicker-payment' at maturity. The credit linked note (CLN) finances the purchase of 85,000 hectares of rainforest in Paraguay with the aim of preserving it for environmental protection and reduction of CO2 emissions.
For the preservation of the forest, Morongy SA (Paraguay), a subsidiary of Morongy AG (Switzerland) and borrower in the CLN, receives financial compensation through a climate protection program of the Paraguayan government. Investor's principal amount and interest payments are secured by a mortgage collateralization of the land. This investment not only offers a collateralized fixed-income including a kicker, but also an active contribution to the protection of rainforests and thus the reduction of CO2 emissions.
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Usage of Credit Linked Note (CLN)
The funds raised by the CLN will be used for a mortgage secured loan to acquire Paraguayan rainforest. The project initially comprises 85,000 hectares of rainforest in the Chaco Seco region in Paraguay, there's a potential expansion of the project area up to 200,000 hectares.
Fixed and secured Return
Investors in this CLN benefit from a fixed interest rate of 7.5% p.a. plus a kicker of 110% on the principal with pay-out at maturity. The CLN is secured by the land purchased by the funds raised by the CLN.
The land purchased will be included in the government-supported environmental program "Régimen de Servicios Ambientales", which generates a fixed return per hectare per year. This program aims to protect Paraguay's natural forests, preserve the absorption of CO2 and empower the government to further enhance its efforts to fight climate change through CO2 certificates. The government acts as a counterparty of the environmental program and guarantees the annual installments by law.
General Product Context
Access innovative asset class with the environmental impact
Natural Environment Preservation
Due to the over-harvesting of the forest in the past decades, the rainforest has been exploited to such an extensive degree that now is the time to turn the tide. By making the forest a revenue-generating asset it can be both profitable and sustainable.
Cultural Heritage Preservation
Due to the disappearance of vast amounts of the rainforest, many of the indigenous people have lost their homes and are losing their cultural heritage with it. By preserving the forest not only will we save the natural part of it but also the culture of the local inhabitants.
The Leader of The Nature-Based Economy
Morongy is a forest investor and manager with extensive experience in Latin America, striving to become one of the world's leading players in the nature-based economy and to be a catalyst with its natural capital solutions.
Its competency in economic and ecological land-use, restoration and conservation leads to state-of-the-art methodologies for protection, recreation, initiation, acceleration of recovery processes of ecosystems that have been disturbed.
- Morongy SA has in-depth experience in managing and preserving hundreds of thousands of hectares of forest in South and Central America.
- The use of the Credit-Linked Note (CLN) to preserve the rainforest in Paraguay makes the product ESG relevant.
- Rainforest preservation enables issuance of carbon credits which are part of a worldwide climate program aiming to cap carbon emissions.