Quito: Ecuador’s bond investors sold $1.63 billion of the nation’s sovereign bonds to Credit Suisse Group, according to the bank - a step toward what stands to be the largest debt-for-nature transaction of its kind.
The Zurich-based lender, which was acquired by UBS Group AG in March, said it accepted for purchase $202.3 million of Ecuador’s step-up bonds due 2030, $1 billion of the securities maturing 2035 and $420.2 million of the 2040 bonds, according to a regulatory filing.
Investors who tendered the notes received between 35.5 cents and 53.25 cents on the US dollar, allowing the bank to buy the bonds at a steep discount.
The transaction is part of a debt-for-nature swap meant to help the South American nation replace of portion of its costly sovereign bonds with cheaper debt. The savings extracted from the transaction will be used fund certain conservation and sustainability efforts of Ecuador, the bank said when it announced the offer last week.
As part of the deal, Ecuador has also received a guarantee from the Inter-American Development Bank backing a new debt instrument that seeks to lower the cost and refinancing risk, according to a document describing the potential transaction published on the website of the Washington-based bank. The IDB surety will be provided along with a political risk guarantee by the US International Development Finance Corporation, or DFC, the document said.