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Ecuador is working towards its second debt-for-nature swap worth up to USD 1 bn, Reuters reports. The swap is led by the Ireland-registered special-purpose vehicle Amazon Conservation DAC, which plans to enter into a third-party agreement with the Ecuadorian government to finance protection efforts in the Amazon rainforest if the swap materializes. Amazon Conservation DAC plans to use the proceeds to buy back four bonds from the country’s debt holders with the buyback supported by BofA Securities as a transaction manager, according to the newswire.
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Ecuador’s first swap is a record-breaker: Ecuador tried out the finance tool before with a USD 1.6 bn agreement — the largest globally in the nascent instrument — for nature conservation efforts in the Galapagos Islands.
REMEMBER- That swap has been under scrutiny: The Inter-American Development Bank’s oversight body, the Independent Consultation and Investigation Mechanism (MICI), has placed the record swap under investigation in September after complaints from local groups over transparency. 24 groups filed a complaint citing a “lack of accessible and relevant information” and “lack of an engagement strategy with potentially impacted communities” after conservation money failed to materialize since the agreement was inked in 2023. Dubbed the “holy grail for eco-finance experts,” the agreement was to see USD 1.1 bn of the country’s debt partially forgiven in exchange for conserving its Galapagos Island.
