The Republic of Ecuador’s $1 billion debt conversion, completed in December 2024, represents a landmark in sustainable finance. Structured by Bank of America as sole structuring agent, the transaction combined financial innovation with environmental impact at an unprecedented scale.
The deal was the largest debt conversion of its kind ever completed in international capital markets and the first to focus on the conservation of terrestrial and freshwater ecosystems in the Ecuadorian Amazon. It was rated Aa2 by Moody’s and AA by Fitch, supported by political risk insurance from the US International Development Finance Corporation and a liquidity guarantee from the Inter-American Development Bank.
The structure involved a complex liability management exercise and a highly structured issuance with credit enhancement. It generated over $800 million in net fiscal savings for Ecuador by 2035 and unlocked $400 million in new conservation funding, with an additional $60 million expected in endowment returns over the next 17 years.
The proceeds will support the Amazon Biocorridor Program, a conservation initiative developed by the Ecuadorian government with input from The Nature Conservancy and Indigenous communities. The programme aims to improve the management of 4.6 million hectares of protected areas and safeguard an additional 1.8 million hectares of forests and wetlands. It will also protect 18,000km of rivers, enhance climate resilience and support local livelihoods.
This deal exemplifies how sovereign finance can be reimagined to deliver measurable environmental outcomes while improving fiscal health
The transaction aligns with Ecuador’s commitments under the Kunming-Montreal Global Biodiversity Framework, particularly the “30×30” target to protect 30% of land and sea by 2030. It also sets a new benchmark for sovereign ESG financing by integrating conservation, fiscal sustainability and multilateral support.
As Maulin Shah, managing director of municipal markets investment banking at Bank of America, notes: “Debt conversions are a powerful tool to solve pressing issues facing the environment and society more broadly, and this transaction for the Republic of Ecuador demonstrates a model that can be replicated with other developing nations worldwide.”
This deal exemplifies how sovereign finance can be reimagined to deliver measurable environmental outcomes while improving fiscal health – making it a standout ESG transaction not just in Latin America, but globally.
