Record Galapagos deal sparks clamour for eco-friendly debt swaps

he record $1.1 billion debt-for-nature swap Ecuador just pulled off to protect its unique Galapagos Islands is creating a clamour among other nature-rich but cash-poor countries eager to follow suit.
While a number of governments already had plans in the pipeline before Ecuador’s success, those who put these types of deals together say that breaking the $1 billion barrier has fundamentally changed what is possible.
At their simplest, in debt-for-nature swaps a country’s government bonds or loans are bought up by a bank or specialist investor and replaced with cheaper ones, usually with the help of a multilateral development bank “credit guarantee”.
As those guarantees protect buyers of the new bonds if the country isn’t able to pay the money back, the interest rate is lower, allowing the government involved to spend the savings on conservation.