Ecuador launches bond buyback offer

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Ecuador plans to take out a loan to repurchase four series of international bonds maturing between 2030 and 2040, of which $14.2 billion is outstanding.

The sovereign aims to sell new bonds in the international market that will be purchased by a special purpose vehicle — Amazon Conservation DAC — using a loan from a commercial bank, the SPV said Tuesday in a press release that did not disclose the name of the lender.

The proceeds will be used to repurchase the existing notes at between $475 and $730 for every $1,000 in principal to bondholders that tender their notes by December 10, according to the press release.

Bank of America is acting as dealer manager on the buyback, it added.

Through Amazon Conservation DAC, Ecuador is looking to issue $1 billion worth of notes, according to Fitch Ratings.

The new bilateral facility will be backed by the US International Development Finance Corporation, while the Inter-American Development Bank will provide a $155 million liquidity guarantee to cover two years of interest payments under the notes and fund a $5 million reserve account to cover arbitration and other expenses, Fitch said.

The SPV began calling investors on Tuesday to pitch the sale of 18-year notes with Bank of America as the sole bookrunner on the offering, according to IFR News.

The government is also working with The Nature Conservancy on the deal, according to the ratings agency.

Ecuador is expected to use the deal to use the savings from the so-called debt-for-nature swap to fund nature conservation.

In May last year, Ecuador swapped $1.63 billion worth of 2030, 2035 and 2040 bonds for a $656 million loan from Credit Suisse as part of debt exchange to finance long-term marine conservation projects in the Galápagos Islands.

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