Environmentalists Buy Ecuador Debt in Swap

Environmentalists bought off $9 million of Ecuador’s debt on in the largest “debt for nature swap” ever signed.

Under the agreement, the World Wildlife Fund and the Nature Conservancy will buy from American Express Co. and Morgan Guaranty Trust Co. $9 million of Ecuador’s debt at a discount of 11.875 cents on the dollar, putting the total cost to the group at $1.07 million.

The commercial bank debt will be converted, one-for-one, by the Ecuador Central Bank into local currency bonds that will be spent for conserving Ecuador’s dwindling rain forests.

“Debt becomes not so much a burden as an opportunity to kill two birds with one stone--debt and conservation,” said Sen. Robert Kasten, a Wisconsin Republican who is co-sponsoring a bill that would expand debt-for-nature swaps.