Description: In partnership with the Government of Ecuador, the U.S. International Development Finance Corporation (DFC), Inter-American Development Bank (IDB), Credit Suisse, Oceans Finance Company (OFC), and the Pew Bertarelli Ocean Legacy announced the financial close of a $656 million Galápagos marine conservation-linked bond (Galápagos Marine Bond), arranged and structured by Credit Suisse. The Galápagos Marine Bond was used to finance a debt conversion for Ecuador exchanging $1.628 billion of Ecuador’s international bonds for a $656 million loan (the Loan). Credit Suisse acted as offeror for the international bonds. DFC is providing $656 million in political risk insurance for the Loan, while IDB is providing an $85 million guarantee. A group of 11 private insurers including Swiss Re provide more than fifty percent reinsurance to facilitate the project. Through this debt conversion, Ecuador will realize more than $1.126 billion lifetime savings through reduced debt service costs.
The debt conversion will generate an estimated $323 million for marine conservation in the Galápagos Islands over the next 18.5 years, including approximately $12.05 million of new funding annually and around $5.41 million annually, on average, to capitalize an endowment for the Galapagos Life Fund (GLF). The endowment, which will be a source of permanent funding for the GLF to continue supporting marine conservation projects beyond the term of the transaction, is estimated to grow to more than $227 million by 2041. Combined, the debt conversion and endowment will generate more than $450 million for marine conservation in the Galápagos Islands.
Project maturity: active
Country / region: Ecuador
Start/end date: 2023 – Unknown
Realm: Marine
Insurance trigger type: Indemnity
Insurance scheme target: Private – Investors
Insurance product type: Insurance to de-risk/enable investment in nature
Insurance provider/Scheme Developers: Public-Private-Partnership
Insurable risk: Political and Sovereign Credit Risk
Partners: Government of Ecuador, the U.S. International Development Finance Corporation (DFC), Inter-American Development Bank (IDB), Credit Suisse, Oceans Finance Company (OFC), Pew Bertarelli Ocean Legacy, AXA XL, Fidelis MGU, Chubb Global Markets, Sovereign Risk Insurance Ltd, Mosaic, Coface, Swiss Re, MSAmlin
Sources: https://www.dfc.gov/media/press-releases/financial-close-reached-largest-debt-conversion-marine-conservation-protect; https://www.pew-bertarelli-ocean-legacy.org/en/research-and-analysis/issue-briefs/2024/12/innovative-financing-tool-helps-protect-galapagos-islands
Case submitted by: UNEP FI