LONDON, May 9 (Reuters) - Ecuador sealed the world's largest "debt-for-nature" swap on record on Tuesday, selling a new "blue bond" that will funnel at least $12 million a year into conservation of the Galapagos Islands, one of the world's most precious ecosystems.
Tuesday's $656 million "Galapagos Bond," as it has been dubbed, will run until 2041 and gave investors that bought it a 5.645% "coupon" or interest rate, its bankers said.
Ecuador sovereign bonds currently yield from 17% to 26%, but the new bond has an $85 million 'credit guarantee' from the Inter-American Development Bank and $656 million of political risk insurance from the U.S. International Development Finance Corp (DFC), effectively making it less risky.
The driver has been the remote Galapagos Islands, some 600 miles (970 km) off Ecuador's mainland coast, that inspired Charles Darwin's Theory of Evolution.
Scott Nathan, the chief executive of DFC, said people needed to "stay tuned" for similar deals in other countries and the Galapagos deal had been a long time coming.