Ecuador’s Amazing Debt Reduction in Exchange for Galapagos Protection

Listed as a World Heritage Site, the Galapagos archipelago offers unparalleled biodiversity. Above: Marine iguanas. Sebastien Lecocq/SL-Photography –

This “debt against nature” operation involving 1 billion dollars is unprecedented in its scale.

Kill two birds with one stone. Ecuador will lighten the cost of its debt All preserving the environment. The country carried out an extraordinary operation last week which allows it to save 1 billion dollars on its debt against the commitment to invest for the protection of Galapagos, world heritage listed archipelago. Concretely, private creditors from Ecuador agreed to sell bonds (whose maturity ran between 2030 and 2040) worth 1.6 billion dollars, for only 600 million. The holders of these new debt securities (maturity 2042) have therefore accepted a significant discount of 60%. Moreover, the interest rate of the new bonds was negotiated at the attractive price of 6.95%, well below the current market price which exceeds 10%.

“The guarantee provided by development financial institutions – the Inter-American Development Bank IDB and the Development Finance Corporation in the United States – rated “AAA” by…

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