“World’s largest ocean-friendly debt swap deal takes shape in Ecuador, with Credit Suisse AG group offering sub-6% yield on new bond.” With this appointment, the Minister of Economy and Finance, Pablo Arosemena, confirmed the operation carried out by a Swiss bank and the purchase of the government debt of Ecuador at great discounts, through the proceeds of the sale of these bonds, ensuring savings that the Government will use to protect the Galapagos Islands.

This is clear from the publication on the Bloomberg portal, which Arosemena also quotes in a tweet he published on the morning of May 6. This is the first time an official has mentioned the operation, which Credit Suisse announced on April 26, an offer to buy Ecuadorian debt bonds in cash for $800 million.

Credit Suisse announces the purchase of Ecuadorian bonds from the holders, and the offer expires on May 4

The Ministry of Economy and Finance did not make a statement until the announcement of Arosemen and limited itself to emphasizing that it was a private operation.

According to a statement from Credit Suisse, published via the Luxembourg Stock Exchange, the offer expired at 8:00 a.m. on May 4, and settlement is scheduled for May 9.

Last Thursday, after a bid deadline, the Swiss bank announced it would buy $1.628 million worth of Ecuadorian bonds as part of a broader refinancing operation to channel savings and promote conservation and sustainability efforts. Ecuador. In addition, they will invest about 644 million dollars in the operation.

The Zurich-based institution will buy bonds with a face value of 2030 for $202.3 million at 53.25% of their original value.

It will also acquire 2,035 bonds with an issue value of $1,006.2 million at 38.50% of the initial price and 2,040 bonds with a face value of $420.19 million at a discount of 35.50%. The bond due 2040 rose about 4 cents on Friday to trade at 36 cents on the dollar, its highest level since mid-February.

Meanwhile, the Bloomberg portal also noted on May 3 that the Inter-American Development Bank (IDB) extended a guarantee to Ecuador in support of an $800 million debt swap in exchange for nature protection.

Meanwhile, in a Bloomberg publication, Ramiro Blázquez, head of strategy at BancTrust & Co. in Buenos Aires, described the operation as a positive development since it will reduce debt repayments and, in the short term, could lead to a new debt ceiling. prices.

“The government would eventually buy back its debt at a large discount that would be indirectly financed by the blue bond, but its new debt will be a loan owed to a special purpose vehicle,” the expert explained.

The new securities, which benefit from multilateral guarantees, are expected to be rated Aa2 by Moody’s Investors Service, the third highest investment grade rating. This is 16 notches above the national rating of the foreign issuer.

Greater protection of the Galapagos Marine Reserve would be used to replace debt for around $1.1 billion, says Roque Sevilla

Existing debt maturing in 2040 sold by Ecuador, which has defaulted on its foreign bonds 11 times since its independence in 1830, is yielding about 16%.

According to the portal, the new Galapagos bonds will be issued by GPS Blue Financing DAC, a special purpose vehicle. The issuer will then lend the funds to the Ecuadorian government under the insurance of the International Development Finance Corporation of the United States.

The blue deal is similar to others in which Credit Suisse has already been involved. The lender has arranged a $364 million nature debt swap for Belize in 2021 with the Nature Conservancy charity. Last year, it landed another $150 million deal for Barbados, Bloomberg noted.

The sale is a major development for Ecuador, which before Credit Suisse’s recent purchase had about $17.3 billion in dollar-denominated bonds. Government debt maturing in 2030 rose 3 cents to 55 cents on the dollar on Friday, according to indicative prices compiled by Bloomberg.

“The bidding results show that the market believes that Ecuadorian bonds are undervalued,” said Katrina Butt, emerging markets economist at AllianceBernstein in New York. “Today’s prices are adjusting to reflect that change in sentiment.”