When El Salvador closed a billion dollar debt conversion in October 2024, the fund appointed to co-manage the conservation money was FIAES, the country's environmental investment fund. FIAES was itself created in 1993, out of an earlier debt-for-nature swap between the United States and El Salvador. The mechanism has now been running long enough that its second generation of deals is being administered by institutions the first generation built.
The name is a poor description of the transaction. Nothing is swapped for nature. What happens is a refinancing: a government buys back its own debt at less than face value, usually with money borrowed on better terms, and contractually commits a defined share of the resulting savings to conservation over a defined period. The Conservation Finance Alliance, whose practice standards the resulting funds are generally written against, defines a debt conversion as a mechanism that lets an indebted government reduce or restructure part of its debt in return for a promise to use the monies saved to achieve conservation outcomes, and notes that debt-for-nature swap is the term commonly used for one type of it. The conservation money is the savings. It is not the debt.
Seychelles, 2016: the deal that got smaller
The transaction that established the modern template was small, slow and short of its target, and the fullest account of it was published by the trust fund it created. SeyCCAT's case study, written by Didier Dogley and issued in March 2024, records a timeline that began at the Rio+20 summit in June 2012, when Seychelles announced it would set aside 30 per cent of its exclusive economic zone for marine conservation provided it could raise 2.5 million dollars a year to manage the area.
Negotiations with the Paris Club opened in March 2014. Five creditor countries initially agreed: France, the United Kingdom, Belgium, Italy and South Africa. Germany and Japan declined. South Africa later found it could not participate. In February 2015 the parties agreed a buyback of 30 million dollars of debt at a 5 per cent discount. That is not the deal that closed. The Nature Conservancy's board approved a 23 million dollar loan at 3 per cent interest, of which only 15.2 million was needed, and philanthropic grants raised 5 million against a requirement of 8 million. The missing 3 million was never found, so the two sides reset the transaction at 21.6 million dollars of debt at a 6.5 per cent discount. The case study dates implementation of the financial transaction to February 2016, and says the swap was concluded that year.
What the discount bought is easy to state and easy to overstate. Seychelles received a discount of 1.4 million dollars on 21.6 million dollars of debt, and an extension of repayment on the restructured maturities from eight years to ten. Only the 15.2 million dollar loan component had to be serviced in foreign exchange; the remainder was payable in Seychelles rupees. Through SeyCCAT, more than 280,000 dollars a year became available for marine conservation and climate work, alongside an endowment capitalised at 150,000 dollars a year over twenty years. The case study is candid about the gap between ambition and result, opening its benefits section with the observation that the amount of debt swapped and the money obtained were much lower than originally planned.
The conservation commitment, by contrast, was not scaled down. Seychelles committed to protecting 30 per cent of an exclusive economic zone of 1.35 million square kilometres, which is more than 410,000 square kilometres of marine space, half in high biodiversity zones and half in medium biodiversity and sustainable use zones. Since 2018 SeyCCAT has issued 3.26 million dollars of grants to 66 projects run by 56 organisations and individuals.
Belize, 2021: the structure that scaled
Belize is where the transaction acquired the architecture every subsequent deal has borrowed. Its entire external commercial debt sat in a single Eurobond known as the Superbond, 553 million dollars, a quarter of total public debt, trading between 38 and 47 cents on the dollar after the economy contracted by 16.7 per cent in 2020 and debt reached 133 per cent of GDP.
According to The Nature Conservancy's own case study, the government repurchased the whole Superbond at 55 cents on the dollar, financed by a 364 million dollar Blue Loan from Belize Blue Investment Company, a Delaware subsidiary TNC formed to be lender of record. Credit Suisse financed that subsidiary through a repackaging vehicle which issued Blue Bonds to institutional investors. The loan proceeds were split three ways: 301 million dollars to retire the Superbond, 24 million to prefund a conservation endowment, and 39 million for liquidity reserves, transaction costs and original issue discount.
The piece that made it work is insurance. The United States International Development Finance Corporation wrote a political risk insurance policy covering non-payment of an arbitral award and denial of justice, backed by the full faith and credit of the United States government. Belize acceded to the New York Convention in March 2021 specifically so that an arbitral award would be enforceable. With that credit enhancement and the back-to-back legal structure, the Blue Bonds were rated Aa2 by Moody's, which is how a country in selective default financed itself at rates that produced savings at all.
The reported results are correspondingly concrete: a 189 million dollar reduction in principal, equal to 12 per cent of GDP; 200 million dollars of debt service reduction over twenty years, of which 53.6 million falls in the first five; a 6.5 year extension of tenor; and a Standard and Poor's upgrade from selective default to B minus after refinancing. On the conservation side, an estimated 180 million dollars over twenty years, made up of 84 million in government payments averaging 4.2 million a year, a 23.45 million dollar prefunded endowment, and 71 million of anticipated market return estimated at 7 per cent annually. Belize committed to raising biodiversity protection zones from 15.9 per cent to 30 per cent of its ocean area by 2026 and to completing a marine spatial plan by the same date. Missing a milestone does not void the deal; it increases the payments owed under the conservation funding agreement, which carries cross-default provisions with the loan.
Galapagos, 2023: the insurance becomes the product
Ecuador's Galapagos transaction, which reached financial close on 9 May 2023, is the same structure at a scale where the credit enhancement dwarfs everything else. Ecuador exchanged 1.628 billion dollars of its international bonds for a 656 million dollar loan, funded by a Galapagos Marine Bond arranged and structured by Credit Suisse. DFC provided 656 million dollars of political risk insurance covering the entire loan. The Inter-American Development Bank provided an 85 million dollar guarantee, and eleven private insurers reinsured more than half of the DFC exposure. DFC headlines the release as the largest debt conversion for marine conservation.
Ecuador's lifetime saving is put at more than 1.126 billion dollars. Of that, an estimated 323 million dollars goes to marine conservation over 18.5 years: roughly 12.05 million a year of new funding, plus about 5.41 million a year on average to capitalise an endowment projected to exceed 227 million dollars by 2041. The recipient is the Galapagos Life Fund, a non-profit governed by an eleven member board of five Ecuadorian government ministers and six non-government representatives, directing money to the Galapagos National Park Service and to Ecuadorian organisations working on research, fisheries and climate resilience.
DFC also describes a condition that does not appear in the headline numbers. Securing the political risk insurance depended on commitments to continued community engagement and transparency, including ongoing environmental and social impact assessments and reporting on stakeholder concerns. The insurer, in other words, is enforcing the consultation.
2024: the model leaves the ocean
Two transactions in the last quarter of 2024 moved the mechanism onto land and fresh water. In October, El Salvador repurchased 1.031 billion dollars of its outstanding bonds at a discount, financed by a one billion dollar loan arranged by JPMorgan, with one billion dollars of DFC political risk insurance and a 200 million dollar standby letter of credit from CAF. Lifetime savings are put at more than 352 million dollars, of which 350 million goes to the Rio Lempa Conservation and Restoration Program over twenty years: 200 million spent directly at about 9.75 million a year, and 150 million into an endowment at roughly 7 million a year, intended to fund the programme beyond 2044. El Salvador additionally committed to declaring 75,000 hectares of protected aquifer recharge zones by 2044, approving a national integrated water resources plan, and establishing a public complaint mechanism for violations of water and environmental law.
In December, Ecuador returned with a second conversion, this one for the Amazon. Roughly 1.53 billion dollars of international bonds were refinanced, generating more than 800 million dollars of net fiscal savings by 2035 and an expected 460 million dollars for the Amazon Biocorridor Program over seventeen years: 19 million a year for the programme itself and 4.5 million a year into an endowment projected to reach 137 million dollars by 2041. The programme targets improved management of 4.6 million hectares of existing protected areas, protection of a further 1.8 million hectares of forest and wetland, and 18,000 kilometres of rivers.
The superlatives in these announcements are worth reading with a calendar in hand. DFC described El Salvador's 350 million dollar allocation in October as the largest funding commitment a country had ever made for conservation in a debt conversion. Eight weeks later TNC described Ecuador's 460 million as the largest amount raised for conservation in any debt conversion. Both statements were true when issued. Neither is a durable fact about the mechanism.
What the mechanism does not do
A debt conversion is not debt relief, and the deals above do not pretend otherwise. Belize still owes 364 million dollars; what changed is who it owes it to, on what terms, and what it must do with the difference. Seychelles received a discount of 1.4 million dollars, a rounding error against a public debt stock that stood at 876 million dollars in July 2014, and the transaction is significant for the marine spatial plan and the trust fund it produced rather than for its effect on the balance sheet.
The saving comes from the spread between what a country's bonds trade at and what an insured loan costs, and that spread exists because a public insurer has stepped in front of the risk. In Belize and in Ecuador the effective credit is the United States government's, and in El Salvador a development bank added a standby letter of credit on top. Whether that is a good use of public balance sheets is a policy question with an honest answer on both sides. What is not in dispute is where the risk went.
The durable output of these transactions may not be the money at all. Every deal since Seychelles has produced an institution: SeyCCAT, Belize's Conservation Fund, the Galapagos Life Fund, the Amazon Biocorridor Fund. TNC's Ecuador release commits the newest of these conservation trust funds to public reports issued annually, independent audit reports, and clear procedures for identifying grantees, under a local board of directors. The debt gets refinanced once. The fund, if it is built properly, outlasts the bond.
Sources
Every figure, date and deal name above is drawn from one of the documents below. Each was fetched and cached on the retrieval date shown.
- SeyCCAT, The Seychelles Debt-for-nature Swap: A Case Study. Authored by Didier Dogley, March 2024, funded by SeyCCAT through Oceans 5. Carries the negotiation timeline, the closed terms and the party account of what was raised against what was planned https://seyccat.org/wp-content/uploads/2025/03/SeychellesDebtSwapCaseStudy_webversion.pdf Retrieved 2026-08-30
- The Nature Conservancy, Case Study: Belize Blue Bonds for Ocean Conservation. TNC’s own account of the November 2021 transaction, including the Blue Loan components, the conservation commitments and the insurance structure https://www.nature.org/content/dam/tnc/nature/en/documents/TNC-Belize-Debt-Conversion-Case-Study.pdf Retrieved 2026-08-30
- U.S. International Development Finance Corporation, Financial Close Reached in Largest Debt Conversion for Marine Conservation to Protect the Galapagos. Press release, 9 May 2023 https://www.dfc.gov/media/press-releases/financial-close-reached-largest-debt-conversion-marine-conservation-protect Retrieved 2026-08-30
- U.S. International Development Finance Corporation, World’s Largest Debt Conversion for Conservation of a River and its Watershed Completed in El Salvador. Press release, 16 October 2024, including the Rio Lempa programme terms and the note that FIAES was itself created by an earlier swap https://www.dfc.gov/media/press-releases/worlds-largest-debt-conversion-conservation-river-and-its-watershed-completed Retrieved 2026-08-30
- The Nature Conservancy, Ecuador Announces First Debt Conversion for Amazon Conservation. Newsroom release, 15 December 2024, with the Amazon Biocorridor Program figures and the six-project Nature Bonds totals https://www.nature.org/en-us/newsroom/ecuador-announces-debt-conversion-for-amazon-conservation-tnc-nature-bonds/ Retrieved 2026-08-30
- Conservation Finance Alliance, Practice Standards for Conservation Trust Funds, 2020 edition. Glossary entry defining debt conversion and its relation to the term debt-for-nature swap https://www.conservationfinancealliance.org/s/Practice-Standards-For-Conservation-Trust-Funds-2020-EN-links-211208.pdf Retrieved 2026-08-30