Ecuador carries out debt swap for Amazon conservation

The transaction was facilitated by The Nature Conservancy's (TNC) innovative Nature Bonds Program, and supported by the International Development Finance Corporation (DFC), the Inter-American Development Bank (IDB), and Bank of America.

The program aims to enhance the protection of Ecuador's Amazon region, conserving vital ecosystems while supporting local communities.

The innovative debt swap was enabled by a $1 billion loan to repurchase and retire prior Ecuadorian sovereign debt represented by bonds with a nominal value of $1.52 billion, an operation expected to unlock $460 million over the next 17 years for the conservation of terrestrial and freshwater ecosystems in Ecuador's Amazon.

This is the largest amount of conservation funds unlocked through a debt conversion to date. This initiative is also the largest so far under TNC's Nature Bonds Program.

The new financing also involves more favorable terms, generating a debt principal reduction of $527 million and fiscal relief on debt servicing of over $800 million over to 2035.

Bank of America acted as the structuring and placement agent for the issuance and the sole manager of the tender process.

Ecuadorian law firm Bustamante Fabara provided local legal advice to two key parties in the transaction, leveraging its expertise in complex transactions, particularly in debt swaps, through two independent teams.

The firm advised Bank of America, with a team led by partner Diego Ramírez, and who was supported by senior associates James Keeble and Nataly Villasís. The team advising the The Nature Conservancy was led by partner Jesús Beltrán, with partner Rafael Valdivieso, along with director Patricio Santos and senior associates Bruno Pesantes y Gustavo Almeida.

The firm also advised on the country’s 2023 debt-for-nature swap, which secured funding for the conservation of marine reserves and the natural heritage of the Galápagos.

Robalino was the local advisor to DFC and correspondent for Hunton Andrews Kurth LLP. The Robalino team was composed of Javier Robalino Orellana, Martín Pallares, Andrés Donoso, Daniel Robalino, Rafael Serrano, Carol Riofrio, Christian Narváez, and José Salvador.