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Financial Close Reached in Largest Debt Conversion for Marine Conservation to Protect the Galápagos

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 today 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 an $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 is providing 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. 

The GLF is a non-profit organization that was established to direct the marine conservation funding to the Galápagos National Park Service and to efforts to manage, monitor, and enforce marine protections for the waters surrounding the Galápagos Islands. The funds will also support Ecuador-based organizations to conduct research, advance sustainable fisheries, strengthen climate resilience, and develop a sustainable blue economy for the local community. The GLF will be governed by an 11-member board of directors that includes five Ecuadorian government ministers and six non-government representatives. The GLF will be supported by Climate Fund Managers (CFM), via its marine ecosystem manager OFC, and the Pew Bertarelli Ocean Legacy, which together provided the early-stage capital and established the GLF with Ecuador. Aqua Blue Investments provided additional technical assistance to Pew Bertarelli Ocean Legacy to develop the GLF and the project.

In developing conservation commitments and funding priorities, the Ecuadorian government achieved consensus by working alongside the artisanal and industrial fishing sectors and the local communities through an inclusive process that included numerous formal and informal consultations. Additionally, securing the political risk insurance depended on significant commitments to continued community engagement and transparency, and these safeguards include ongoing environmental and social impact assessments and reporting that detail engagement efforts, stakeholder concerns, and economic and ecological changes.   

Ramzi Issa, Global Head of Credit Investor Products Structuring at Credit Suisse, said: “This is a vital transaction for one of the most important marine ecosystems on Earth, the Galápagos, providing it with significant funding for generations while reducing Ecuador’s debt service costs at the same time. It could only have been achieved through collaboration, teamwork and leadership: we’re pleased to have worked so closely with Ecuador, Pew Bertarelli Ocean Legacy, DFC, IDB, CFM together with OFC, and others to make this transaction possible. Ecuador, alongside its partners, is innovating for conservation, capturing the power and potential of private capital to solve pressing issues facing the environment and society more broadly.”

Emma Crystal, Chief Sustainability Officer at Credit Suisse, added: “Partnering with Ecuador, Pew Bertarelli Ocean Legacy, DFC, IDB, CFM together with OFC, and others on this deal to support marine conservation, in one of the most biodiverse locations on the planet, highlights the impact sustainable finance solutions can have in addressing the funding gap for biodiversity conservation. By mobilizing capital and engaging with different stakeholders, global financial institutions can help drive innovation for ocean preservation and environmental protection.”

The Galápagos Marine Reserve is one of the largest and most biologically diverse marine protected areas in the world. In 2022, President of Ecuador Guillermo Lasso created the Hermandad Marine Reserve, expanding the marine protected areas surrounding Ecuador to increase marine conservation. The debt conversion and related conservation activities will advance Ecuador’s “30 by 30” Global Ocean Alliance pledge to protect 30 percent of its marine territory by 2030. 

Reinsurance for the project is provided by AXA XL, Fidelis MGU, Chubb Global Markets, Sovereign Risk Insurance Ltd, Mosaic, and others.