Ecuador Completes $460 Million Debt-for-Nature Swap to Protect Amazon Rainforest
Ecuador has successfully completed its second debt-for-nature swap, unlocking $460 million to safeguard the forests and wetlands of its Amazon rainforest, international conservation NGO The Nature Conservancy (TNC) announced.
The innovative deal involves Ecuador buying back over $1.5 billion of its discounted existing bonds with new, lower-cost financing. This strategic move will generate nearly half a billion dollars in savings over a 17-year period, enabling critical investment in conserving the Amazon’s terrestrial and freshwater ecosystems.
At the heart of the initiative is the Amazon Biocorridor Program, which aims to strengthen the management of 4.6 million hectares (11.37 million acres) of protected areas while expanding protection to an additional 1.8 million hectares of forests and wetlands. Additionally, the program seeks to safeguard 18,000 kilometers (11,185 miles) of rivers, enhance climate resilience, and improve human wellbeing across the Amazon region.
Debt-for-nature swaps are designed to free up government funds that would otherwise be used for debt repayment, channeling them instead toward long-term conservation projects. In Ecuador’s case, the deal will generate approximately $23.5 million annually for the next 17 years. Of this, $19 million per year will directly fund the Amazon Biocorridor Program, while $4.5 million will be invested into an endowment fund to secure future returns.
The agreement also reduces Ecuador’s debt stock by $527 million and unlocks $800 million in net fiscal savings by 2035, achieved through debt repurchases and changes to Ecuador’s repayment profile.
“Through innovative mechanisms in financing and conservation, this program places the Amazon at the center of a transformative vision that … protects one of the most biodiverse ecosystems on the planet,” said Inés Manzano, Ecuador’s Minister of Environment.
The financing package and conservation plan were jointly developed by TNC and the Ecuadorian government, with Bank of America structuring a new $1 billion bond maturing in 2042 at a 6.034% interest rate. The deal also benefited from $1 billion in political risk insurance provided by the U.S. International Development Finance Corporation (DFC) and a $155 million partial liquidity guarantee from the Inter-American Development Bank (IDB).
“This is refinancing done right,” research firm Tellimer noted, praising Ecuador’s strategy of combining credit guarantees and focusing on repurchasing heavily discounted bonds to maximize savings.
Ecuador launched the buyback offer for its existing bonds on December 3, attracting investor interest amounting to $7.6 billion. On December 10, the government finalized the deal, accepting $1.53 billion of bonds, as confirmed in a stock exchange filing.
This landmark deal highlights Ecuador’s commitment to environmental preservation while simultaneously addressing its fiscal challenges, marking another step toward a sustainable future for one of the planet’s most vital ecosystems.
