World Bank Seeks to Unclog Cat Bond Jam in Emerging Markets
- The World Bank hasn’t priced any Cat bonds since 2021
- New COP27 fund could help with the financing of such deals
A resident carries a water catchment tank past debris after Hurricane Grace made landfall in Tecolitla, Veracruz state, Mexico, on Saturday, Aug. 21, 2021.
Photographer: Hector Adolfo Quintanar Perez/BloombergThe World Bank is looking to restart the issuance of catastrophe bonds to help developing countries improve their preparedness for losses from natural disasters.
The supranational lender has issued close to $2.6 billion of catastrophe bonds since 2014, including a $1.36 billion transaction priced in 2018 to help governments in Colombia, Chile, Mexico and Peru hedge earthquake-related losses. Nonetheless, it hasn’t priced any transactions since July 2021, in part because institutional investors have allocated less cash to buy new cat bonds because they needed to use it to compensate for a slump in financial markets, said Michael Bennett, head of market solutions and structured finance at the World Bank.