Credit Suisse Spark Environmental Revolution: Historic Debt-for-Nature Swap Saves Galapagos Islands
Credit Suisse Spark Environmental Revolution: Historic Debt-for-Nature Swap Saves Galapagos Islands
24
May
Posted by: Baris Karapinar
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ESG News
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Switzerland has made a significant contribution to conservation efforts in the Galapagos Islands, one of the world’s most precious ecosystems in Ecuador. In an unprecedented move, Credit Suisse, a Swiss bank renowned for its pioneering role in environmental, social, and governance investment, has purchased three of Ecuador’s bonds, leading to the largest-ever debt-for-nature swap. This groundbreaking initiative will not only free up funds for the preservation of the Galapagos Islands but also have a positive impact on Ecuador’s financial situation.
The Galapagos Islands are home to numerous species found nowhere else on Earth, including giant tortoises, marine iguanas, and Darwin’s finches. The islands are a UNESCO world nature heritage site, home to unspoiled nature and animal life. Inspired by this unique biodiversity, Charles Darwin formulated his Theory of Evolution.
By acquiring the bonds for $644 million instead of their $1.6 billion face value, Credit Suisse facilitated substantial debt relief. In return, the Ecuadorian government pledged to invest around $18 million annually for the next two decades to support conservation efforts on the remote islands.
The existing debt will be replaced with a more manageable $656 million “Galapagos Bond,” maturing in 2041 and insured by the U.S. International Development Finance Corporation. The bond also benefits from an $85 million guarantee provided by the Inter-American Development Bank, further reassuring investors. Moody’s assigned the new debt a provisional investment-grade Aa2 credit rating, significantly higher than Ecuador’s previous “junk” rating.
By supporting the preservation of this extraordinary ecosystem, Switzerland and Credit Suisse demonstrate their commitment to global climate and sustainability goals. This groundbreaking debt-for-nature swap not only strengthens Switzerland’s position as a leader in environmental stewardship but also highlights the potential for innovative financial solutions to drive positive change worldwide.