Credit Suisse does business in nature conservation

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After all the scare reports over the past few weeks, the good thing from Credit Suisse (CS): Thanks to the largest ever “debt for nature” swap deal, the threatened Ecuadorian Galapagos Islands are receiving approximately $800 million to be fully invested. nature should be protected.

As “FAZ” reported, the major bank recently bought back Ecuadorian government bonds with a face value of $1.6 billion. However, CS only paid $800 million as its value in the secondary market has dropped sharply recently. The bonds are trading between 35.5 and 53.3 cents per dollar and have a maturity between 2030 and 2040.

There’s also an NGO on board

CS takes almost no risk: The Inter-American Development Bank has given Ecuador a guarantee for the rollover of up to $800 million in government bonds. So the new CS owner UBS shouldn’t see a problem with this deal.

Especially since it’s not the first of its kind. Because this transaction was officially named, CS had previously “debt for nature swaps”. As part of such transactions, economically weak countries can reduce their external debt and in turn take environmental protection measures. Together with the nonprofit “The Nature Conservancy”, CS has developed a model that makes this type of debt swap accessible to institutional investors.

For example, in 2021, $364 million in “nature protection debt” was exchanged in the Central American country of Belize. In 2020, there was such an agreement with the Caribbean island of Barbados.

How is money used?

Funds should actually be invested in nature conservation. A trust fund manages money from debt swaps. The money will be used for a new marine reserve in Ecuador. The Galapagos Archipelago is one of the most valuable ecosystems in the world. According to “FAZ,” the Galapagos National Park, which has benefited from the funds, is said to have managed the funds provided quite poorly.

Source :Blick