Political Risk Insurance to Support a marine conservation-linked bond in Galapagos

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.