The Caribbean island nation of Jamaica is “pleased” to have secured protection from its second World Bank supported disaster bond, Finance Minister Dr. Nigel Clarke has stated, additionally citing his international locations gratitude for monetary help from Hong Kong, presumably via its ILS Grant Scheme.
As we defined, at $150 million the protection is a smaller quantity than secured again in 2021 with Jamaica’s first World Bank cat bond and the notes have priced at a better degree as nicely, reflective of modified market situations during the last three years.
But, Jamaica has elected to have the IBRD CAR Jamaica 2024 disaster bond notes listed on the Hong Kong Stock Exchange, which has presumably certified it for the ILS Grant Scheme provided by the nation, which is able to help in paying among the issuance prices associated to cat bond sponsorship.
Dr. Nigel Clarke, Minister of Finance and the Public Service, Government of Jamaica, commented on the pricing of the notes yesterday, “Jamaica is happy to have sponsored the second disaster bond within the worldwide capital markets defending Jamaica towards pure disasters with the a lot appreciated help and help of the World Bank. Consistent with our National Natural Disaster Risk Financing coverage, we search to make sure the availability of fiscal assets to allow a right away response to emergency expenditures that might come up from a direct hit by a excessive depth hurricane.
“This catastrophe bond covers hurricane seasons 2024, 2025, 2026 and 2027 and complements other disaster risk financing instruments that we have in place.”
Dr. Clarke added that, “We express our gratitude for the Hong Kong Insurance Authority who supported the transaction financially.”
The $150 million of IBRD CAR Jamaica 2024 disaster bond notes will probably be issued by the World Bank’s International Bank for Reconstruction and Development (IBRD) via the capital-at-risk notes program.
They will finance US $150 million of insurance coverage protection for the Government of Jamaica towards named storm occasions throughout 4 hurricane seasons and characterize a renewal of the World Bank’s 2021 cat bond for Jamaica, the primary for a small island state.
Jorge Familiar, Vice President and Treasurer of the World Bank additionally stated, “We are proud to have partnered with Jamaica for the second time on a cat bond transaction. Over recent years, Jamaica has done a very impressive job with its fiscal consolidation. Through its comprehensive disaster risk strategy, of which this cat bond renewal plays a critical part, Jamaica is proactively protecting its fiscal position against risk in a manner that could become a model for other countries vulnerable to natural catastrophe risk.”
Lilia Burunciuc, Country Director for Caribbean Countries, World Bank added, “The need for the Caribbean to prepare for disaster impacts cannot be overstated, as it is one of the most vulnerable regions globally. Important to this process is having available resources and the World Bank is pleased to support Jamaica’s catastrophe bond, which will help the country respond and rebuild quickly in the event of an impact.”
Utilising a parametric set off, the Jamaica cat bonds could make their funds swiftly available to finance insurance coverage payouts to Jamaica, if a extreme tropical cyclone occasion happens.
Payouts will probably be triggered if a named storm occasion meets the standards for location and severity set forth within the bond phrases. You can learn extra about that in our Deal Directory entry.
Some 15 international traders backed this second disaster bond for Jamaica, with the cat bond distribution cut up as 66% ILS funds, 1% re/insurers and 33% asset managers.
Geographically, the Jamaica cat bonds are being distributed 43% to the United States, 40% Europe, 14% Bermuda and three% to Asia and Australia.
Aon Securities and Swiss Re Capital Markets acted because the joint structuring brokers and joint bookrunners for the second Jamaica disaster bond transaction. AIR Worldwide is the chance modeler and calculation agent.
Paul Schultz, CEO Aon Securities commented, “Aon Securities LLC and Aon Securities (Hong Kong) Ltd. are privileged to work with the World Bank in its latest capital market transaction supporting the Government of Jamaica. With a strategic emphasis on initiatives, including risk management and resiliency, aimed at the positive economic response to climate change and finance emergency response, the Government of Jamaica continues to demonstrate exemplary leadership in the capital markets arena. We are deeply committed to contributing to this mission.”.
Jean-Louis Monnier, CEO of Swiss Re Capital Markets Corporation additionally stated, “Swiss Re Capital Markets is proud to have partnered with the World Bank and the Government of Jamaica to successfully bring the World Bank’s second catastrophe bond issuance to market supporting the Government of Jamaica. This transaction mirrors the ground-breaking trigger mechanics of the first issuance in 2021 that allowed for faster payout post event and have since become a market standard for disaster relief transactions. Once again, it highlights Swiss Re Capital Markets’ continued commitment to the public sector and embodies Swiss Re’s mission to make the world more resilient.”
The second Jamaica disaster bond will probably be listed on the Hong Kong Exchange (HKEX), so this turns into the second time that one of many World Bank facilitated cat bonds is listed in Hong Kong, after the $350 million IBRD – Chile 2023 cat bond notes had been listed there in early 2023.
As stated, the Jamaican authorities may have been capable of scale back among the prices of issuance for its second disaster bond via the itemizing in Hong Kong presumably qualifying it for the international locations ILS Grant Scheme, which may be notably useful for sovereign sponsors.
As we reported yesterday, the IBRD CAR Jamaica 2024 disaster bond was priced at $150 million in dimension, whereas the unfold was finalised at 7%, which was the upper-end of the preliminary worth steerage.
You can learn all about this IBRD CAR Jamaica 2024 disaster bond and greater than 1,000 different cat bond transactions within the in depth Artemis Deal Directory.
