Finance
UK fund giant L&G commits $1 billion to new wave of debt-for-nature swaps
Published by Global Banking & Finance Review®
Posted on February 23, 2026
4 min readLast updated: February 23, 2026
Quick Summary
Legal & General will invest up to $1B over five years as a cornerstone backer of new debt-for-nature swaps with Enosis Capital and AXA XL, aiming to speed deals in emerging markets after U.S. support waned.
Legal & General Pledges $1 Billion for Next Wave of Debt-for-Nature Swaps
LONDON, Feb 23 (Reuters) - Britain's biggest asset manager, Legal & General, has committed up to $1 billion over the next five years to become a cornerstone investor in a major new wave of "debt-for-nature" swaps in developing countries, it has told Reuters.
Debt-for-nature swaps aim to reduce interest payments so governments can spend more on conservation, but the market has faced a relative drought since U.S. President Donald Trump's return to power saw key U.S. government support for them dry up.
L&G’s Role and How Debt-for-Nature Swaps Operate
UK fund giant L&G, which backed Ecuador's record-setting swap for its Galapagos Islands in 2023, as well as deals in Belize and Gabon, is putting its institutional clout behind a broader push to revive and grow the market.
Key Partners and Risk Coverage
The effort is spearheaded by specialist firm Enosis Capital which has also enlisted major environmental organisations and insurance giant AXA XL to provide political risk cover often crucial to these kinds of transactions.
Harper on Cornerstone or Sole Funding
This "will give us the ability to be the cornerstone investor (in the planned set of debt swaps), or hopefully in some circumstances, solely fund the transactions," said Jake Harper, senior investment manager at L&G.
Scale of L&G Commitment
The $1 billion commitment will nearly double L&G's investment in nature conservation and sustainable development in emerging markets to $2.4 billion.
Market Size to Date
It will also make the firm a supersized presence in an experimental corner of the debt market that has seen only around $6 billion worth of debt-for-nature deals done over the last five years.
Goal: Speeding Up Transactions
"What we're trying to solve is how to make these transactions quicker, and that is what hopefully this will achieve," Harper said.
COMPREHENSIVE PACKAGE
How Debt Swaps Reduce Costs
Debt swaps free up money for conservation by buying back expensive government bonds or loans and replacing them with cheaper ones thanks to a "credit guarantee" that protects investors against future political upheaval.
Why the Ecological Stakes Are High
The ecological stakes could barely be higher.
Living Planet Index Context
Global populations of mammals, birds, fish, reptiles and amphibians have declined by 73% on average since 1970, according to the latest Living Planet Index compiled by the World Wide Fund for Nature (WWF) and the Zoological Society of London.
Guarantee Shortfall and Market Lull
A key reason for the recent lull in debt swaps has been the drying up of political risk "guarantees" from the U.S. International Development Finance Corporation, which underpinned swaps in Ecuador, Belize, Gabon and El Salvador.
Enosis Structure and NGO Partnerships
Ramzi Issa, who co-founded Enosis Capital in late 2024 after years pioneering debt swap structuring at Credit Suisse, said the combination of L&G, AXA XL and key NGOs under one umbrella gives countries eyeing swaps an almost ready-made group of backers.
Pipeline of Upcoming Transactions
"We want to get to market quicker by offering a comprehensive package in these transactions," Issa said, adding that around a dozen swaps were currently in the works.
Related Swap Innovations
L&G's Harper said some of its $1 billion could also support emerging offshoots such as debt-for-education or debt-for-food swaps.
Investment-Grade Appeal to UK Investors
He added there was now "a movement" among long-term UK investors to put more money into emerging markets and that debt swaps were attractive because their credit guarantees make them investment-grade quality.
Adam Tomasek, who heads the Debt for Nature Coalition of conservation groups, said L&G's upfront commitment and Enosis' broader setup should help persuade more governments to pursue swaps. "This is a monumental step forward," he said.
(Reporting by Marc JonesEditing by Ros Russell)
Key Takeaways
- •Legal & General will commit up to $1B over five years as a cornerstone investor in new debt-for-nature swaps.
- •The initiative is led by Enosis Capital with AXA XL providing political risk cover to help make deals investment-grade.
- •L&G’s pledge nearly doubles its conservation and sustainable development exposure in emerging markets to $2.4B.
- •The market has seen about $6B of swaps in five years, including Ecuador’s Galapagos deal; L&G backed Ecuador, Belize and Gabon.
- •Around a dozen swaps are in development, with potential extensions into debt-for-education and debt-for-food structures.
Frequently Asked Questions about UK fund giant L&G commits $1 billion to new wave of debt-for-nature swaps
1What is the main topic?
Legal & General is committing up to $1 billion over five years to act as a cornerstone investor in a new wave of debt-for-nature swaps, alongside Enosis Capital and AXA XL.
2How do debt-for-nature swaps work?
They refinance costly sovereign debt with cheaper, credit-enhanced instruments. Savings are earmarked for conservation, with guarantees and political risk insurance reducing investor risk.
3Why is this significant for the market?
With U.S. support waning, L&G’s upfront commitment and AXA XL’s cover aim to accelerate transactions, expand pipelines, and bring more investment-grade opportunities to emerging markets.
