Republic of Ecuador Selects Bank of America for Sovereign Debt Conversion to Support Conservation in the Ecuadorian Amazon

CHARLOTTE, NC - Bank of America today announced the completion of a $1 billion sovereign debt conversion transaction to refinance approximately $1.53 billion of sovereign debt of the Republic of Ecuador ("Ecuador"), generating over $800 million in net fiscal savings for Ecuador by 2035, and unlocking an expected $400 million in new cash funding plus an estimated $60 million in endowment returns for conservation over the next 17 years. The funding unlocked for conservation will support the Amazon Biocorridor Program (Programa Biocorredor Amazónico). This is one of the largest sovereign debt conversion transactions of its kind executed to-date, and the first one focused on conservation of terrestrial and freshwater ecosystems in the Ecuadorian Amazon region. The Amazon Biocorridor Program was developed by the Republic of Ecuador with input from The Nature Conservancy (TNC) and Indigenous Peoples and Nationalities and supported by the Inter-American Development Bank (IDB).

The Republic of Ecuador converted certain of its external dollar-denominated debt into funding at lower debt service costs. It is Ecuador's second debt conversion. Bank of America acted as Sole Structuring Agent for the debt conversion transaction as well as Sole Dealer Manager on the third-party Cash Tender Offer for certain outstanding Republic of Ecuador debt. This transaction benefited from political risk insurance, provided by the U.S. International Development Finance Corporation (DFC) and a liquidity guarantee provided by the IDB.

"The Government of Ecuador reaffirms its commitment to conserving the Amazon region by implementing innovative financing mechanisms. As part of a responsible fiscal management framework, we have carried out a financing operation that not only alleviates the burden of public debt but also ensures sustainable resources for the development of the BCA. This sustainable financing model exemplifies our leadership in addressing environmental and climate challenges for the benefit of current and future generations. Thanks to the coordinated efforts of an inter-institutional team, with the guidance of Enosis Capital as the Technical Advisor and Financial Structuring Agent of the Republic and the Global Green Growth Institute, we have secured credit benefits that link our public finances to concrete actions for the preservation of this invaluable ecosystem," said Juan Carlos Vega, Ecuador's Minister of Economy and Finance.

"The Amazon Biocorridor Program is not simply a strip of territory; it is a comprehensive management model that strategically addresses the major environmental challenges of our time. Through innovative mechanisms in financing and conservation, this program places the Amazon at the center of a transformative vision that not only protects one of the most biodiverse ecosystems on the planet but also ensures the long-term resilience of Ecuador, the Amazon region, and the entire world. The Government of Ecuador, through the Ministry of Environment, Water, and Ecological Transition, is proud to lead an initiative that demonstrates how conservation and innovation can converge to ensure the well-being of our communities and foster truly sustainable economic development," said Inés Manzano, Minister of Environment for Ecuador.

The debt conversion is expected to generate significant cost savings for the Republic of Ecuador over the next 17 years, of which $400 million plus an estimated $60 million in endowment returns over time, is expected to be channeled into a new independent conservation trust fund created specifically for the transparent administration of resources towards financing conservation activities in the Ecuadorian Amazon region. The fund, Fondo del Biocorredor Amazónico (Fondo BCA), will follow international standards for conservation trust funds to ensure transparency and accountability in the use of resources, adopting clear procedures for identifying grantees and issuing public reports annually, including independent audit reports.

"This transaction will generate cost savings for the Government of Ecuador and create an opportunity for returns and impact for investors, while protecting natural habitats and the environment," said Karen Fang, Global Head of Sustainable Finance at Bank of America. "Ecuador's debt conversion brought together public and private sector with civil society and local communities to mobilize blended finance capital that contributes to nature conservation."

The Amazon Biocorridor Program was established to enable a balanced and holistic approach to conservation and sustainable development in the Ecuadorian Amazon. This program seeks to conserve terrestial and aquatic ecosystems and to empower local communities in the Amazon to conserve their territories and improve their well-being, while incorporating social and environmental safeguards.

"This joint effort between the Ecuadorian government and TNC is a significant milestone for conservation in the Ecuadorian Amazon," said Galo Medina, Director of TNC's Ecuador program. "The Amazon Biocorridor Program will help protect one of the most biodiverse regions on the planet and ensure that conservation benefits reach the people who depend on these ecosystems. This initiative exemplifies how the combination of innovative financial mechanisms, the technical expertise of an organization like TNC, and the leadership of a government committed to Amazonian conservation can drive both environmental sustainability and the well-being of local populations, which are fundamental elements for building a resilient and sustainable future for Ecuador."

"Ecuador is a key U.S. ally and one of DFC's largest markets worldwide," said DFC CEO Scott Nathan. "Today's announcement underscores DFC's commitment to leveraging innovative financial tools to reduce sovereign debt, strengthen resilience to economic coercion, and raise money for biodiversity. DFC and the United States are proud to have enabled this debt conversion transaction to benefit the Amazon Biocorridor Program."

"We are happy to support Ecuador's first-of-its-kind operation in the Amazon to scale up sustainable financing for environmental protection," said IDB President Ilan Goldfajn. "The Amazon plays a key role in maintaining global environmental balance and is a priority for the IDB, which we promote through our Amazonia Forever program. This type of operation helps our countries advance biodiversity conservation and build resilience to climate change," he added.

This is Bank of America's second debt conversion transaction. This transaction with the Republic of Ecuador supports Bank of America's commitment to mobilize and deploy $1.5 trillion by 2030 to advance the sustainable development goals (SDGs). In the first 3 years since announcing the goal in 2021, the bank has mobilized $560 billion in sustainable finance (PDF) , with more than $316 billion focused on the transition to a low-carbon, sustainable economy.

This is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration.

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,700 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 58 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

Sheryl Lee, Bank of America
Phone: 1.657.234.9950
[email protected]

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