Bustamante Fabara acts on debt-for-nature swap

Bustamante Fabara acted as local counsel to The Bank of America and The Nature Conservancy (TNC) in the Republic of Ecuador’s debt-for-nature swap.

This transaction was undertaken to support the conservation of terrestrial and freshwater ecosystems in the Amazon, facilitated by TNC’s innovative Nature Bonds Programme, with support from the U.S. International Development Finance Corporation (DFC), the Inter-American Development Bank (IDB), and Bank of America. This programme will enhance the protection of Ecuador’s Amazon region, conserving vital ecosystems while supporting local communities.

The innovative debt swap allowed for a USD 1 billion loan to repurchase and retire previous debt represented by Ecuadorian sovereign bonds with a face value of USD 1.527 billion, an operation that is expected to unlock USD 460 million over the next 17 years for the conservation of terrestrial and freshwater ecosystems in the Ecuadorian Amazon. This is the largest amount of conservation funds unlocked by a debt conversion so far.

This initiative is the largest to date in the Conservancy’s Nature Bonds Programme. The new financing also provides for more favourable terms, generating a reduction in the country’s debt principal of USD 527 million and fiscal relief on debt service of more than USD 800 million over the next 11 years (until 2035). Bank of America acted as structuring and placement agent for the issue and sole book-running manager for the tender.

A&O Shearman acted as international advisor to TNC.

Bustamante Fabara’s team advising The Bank of America was led by partner Diego Ramírez (pictured left) and supported by senior associates James Keeble and Nataly Villasís. The team advising TNC included partner Jesús Beltrán (pictured centre), supported by partner Rafael Valdivieso (pictured right), along with director Patricio Santos and senior associates Gustavo Almeida and Bruno Pesantes.