The World Bank’s pandemic bonds are the first
instruments to transfer the risks associated with global
infectious diseases to the financial markets. The multilateral
raised $320 million from two separate three-year mortality
catastrophe bond issuances on June 28.
The proceeds will help fund the World Bank’s
Pandemic Emergency Financing Facility (PEFF), which provides
funding for low income countries facing a disease outbreak.
This was launched last year in response to the 2014 Ebola
crisis in West Africa, which is estimated to have cost Sierra
Leone, Guinea and Liberia nearly $3 billion.
"One financial framework
element worth mentioning is the trigger structure
reducing the principal at-risk notes"
The transaction is innovative on several fronts, notably the
way it channels investor financing.
"One financial framework element worth mentioning is the
trigger structure reducing the principal at-risk notes," said
Cory Anger, global head of insurance-linked securities (ILS)
structuring at GC Securities,...