Matheson LLP advised Credit Suisse on a landmark marine conservation bond transaction involving a debt conversion for the Republic of Ecuador, supporting marine conservation in the Galápagos Islands. The transaction involved an Irish special purpose vehicle, which issued approximately $656 million marine conservation bonds. The proceeds of the marine conservation bonds were used to acquire $1.628 billion of Ecuador's international bonds, which were exchanged for a $656 million loan to Ecuador. Political risk insurance for the loan was provided by the U.S. International Development Finance Corporation, while the Inter-American Development Bank provided an $85 million guarantee.
The debt conversion will generate significant fiscal savings for the Republic of Ecuador, as well as an estimated $323 million for marine conservation in the Galápagos Islands over the next 18.5 years. Among the features of the deal is the creation of an endowment for the Galápagos Life Fund (GLF), a non-profit organisation that was established to direct the marine conservation funding to the Galápagos National Park Service and to support efforts to manage, monitor, and enforce marine protections for the waters surrounding the Galápagos Islands. The endowment, which will be a source of permanent funding for the GLF to continue supporting marine conservation projects beyond the term of the transaction, is estimated to grow to more than $227 million by 2041. Combined, the debt conversion and endowment will generate more than $450 million for marine conservation in the Galápagos Islands.
Matheson's involvement was led by Finance & Capital Markets partners Christian Donagh and Alan Bunbury and associate Katie Mullane. The core team was assisted by Matheson lawyers across a range of practice areas, including Tax partner, Kevin Smith, Financial Institutions Group partner, Darren Maher, Arbitration partner, Nicola Dunleavy, and each of their respective teams.
Christian Donagh, who co-led the Matheson team, said "It has been a privilege for Matheson to be involved on this unique transaction carefully designed to ensure a hugely positive environmental legacy. The use of an Irish funding vehicle demonstrates the broad appeal and utility of Irish SPVs on truly global transactions of this nature. I expect I am not alone in considering the transaction to be a personal career highlight".