(Reuters) -Ecuador has launched a $1 billion bond to fund a debt buyback aimed at freeing up financing for conservation projects in the Amazon rainforest, IFR reported on Tuesday.
The so-called debt-for-nature swap is Ecuador’s second one after it completed a record-breaking $1.6 billion debt swap for the Galapagos Islands last year.
The buyback marks an important step in Ecuador’s new deal to generate cash for conservation by buying back more expensive debt at a discount, and financing this with new, lower cost funding. The savings generated are then pledged for conservation efforts.
Ecuador, via Amazon Conservation DAC, a special purpose vehicle, agreed to buy back a $1 billion of its international debt and placed an equal-sized bond that will mature in 2042.
Investors had until Tuesday to submit their response to the buyback offer, though details have not yet been published. It is unclear how much savings the transaction will generate.
The new 18-year bond, issued by Amazon Conservation DAC and arranged by BofA Securities, IFR reported has a yield of 6.034%, IFR said. IFR is an LSEG financial service.
Ecuador has been scoping out a new deal to protect part of the Amazon rainforest – widely regarded as the world’s most important natural ecosystem – for some time, sources told Reuters in April.
(Reporting by Javier Lopez and Virginia Furness; Editing by Sandra Maler and Angus MacSwan)
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