(Reuters) – Ecuador will spend $1 billion on a bond buyback as part of a deal to free up funds for conservation projects in the Amazon rainforest, IFR – an LSEG financial service – reported on Tuesday.
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 nominal $1 billion of its international debt and placed an equal-sized bond that will mature in 2042.
The buyback will be financed by the new bond, issued by Amazon Conservation DAC and arranged by BofA Securities, IFR reported. The 18-year bond was placed on Tuesday with a benchmark yield of 6.034%, IFR said.
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 – after completing a record-breaking $1.6 billion debt swap for the Galapagos Islands last year, sources told Reuters in April.
(Reporting by Javier Lopez and Virginia Furness; Editing by Sandra Maler)
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