Thursday, November 29, 2018

Congo's Ebola Crisis May Trigger World Bank's Catastrophe Bond

First up, Artemis, November 27:

PEF cat bond threat rises as risk of Congo Ebola spread now “very high”
The number of deaths confirmed by the World Health Organisation (WHO) from the latest Ebola outbreak in the Democratic Republic of Congo has risen again and the risk of the outbreak spreading to a neighbouring country is said to be very high, all of which heightens the risk for the World Bank’s pandemic catastrophe bond.

When we last covered the ongoing Ebola outbreak the number of confirmed deaths had reached 154 as of November 8th.

As of November 20th that number has risen further to 172 confirmed and 47 probable deaths, out of 386 cases, 339 of which are confirmed by the WHO.

As we said previously, this latest outbreak of the Ebola virus in the Democratic Republic of Congo may be considered a qualifying or eligible event under the terms of the coverage provided by the Class B tranches of pandemic swaps and catastrophe bonds that were issued through the Pandemic Emergency Financing (PEF) transaction by the World Bank’s International Bank for Reconstruction and Development (IBRD) last year.

The PEF’s so-called insurance window amounts to $425 million of protection, made up of $320 million of IBRD CAR 111-112 capital-at-risk pandemic catastrophe bond notes which were sold to ILS investors, along with $105 million of pandemic risk linked swaps (derivatives), also sold to investors to expand the transaction to those seeking a different risk-linked asset.

It is the number of confirmed deaths reported by the WHO which is vital to understanding the risk of this pandemic cat bond being triggered.

With that figure still rising the risk that the World Bank’s pandemic catastrophe bond gets triggered has risen.

The PEF pandemic catastrophe bond can be triggered and payout for a Filovirus like Ebola once the number of confirmed deaths passes 250, but it must also have had a wider impact than to just one country.

Hence, for the pandemic cat bond to be triggered the Ebola outbreak must spread to a neighbouring country, something that the WHO has confirmed is possible.

“The risk of the outbreak spreading to other provinces in the Democratic Republic of the Congo, as well as to neighbouring countries, remains very high. Over the course of the past week, alerts have been reported from Uganda and Zambia,” the WHO said in its latest update....MORE
And from al-Jazeera, Nov. 27 a deep dive on the current humanitarian crisis:

Why Ebola crisis in DRC is unlike anything before
Democratic Republic of Congo has seen multiple outbreaks of Ebola, but this time it faces more challenges
It is the worst Ebola outbreak to have struck the Democratic Republic of Congo (DRC) - and the most complex one.

Since August, authorities in the country, together with a host of partners, have been trying to contain a new outbreak of the disease in the eastern North Kivu and Ituri provinces.

As of November 21, there have been 373 suspected cases of Ebola, including 347 confirmed cases. At least 217 people have already died.

There have been 10 outbreaks of Ebola since 1976 in the DRC, which is considered among the most experienced in dealing with the virus.
The situation this time, though, is different.

The North Kivu and Ituri provinces are among the most unstable and densely populated in the country, and subject to some of the highest levels of human mobility in it.

At the same time, there are warnings that a "perfect storm" of insecurity, community resistance about vaccinations and political manipulation threatens the efforts to contain the spread of the virus.
These factors collectively make the latest outbreak unlike anything the DRC, which is scheduled to hold a crucial presidential election on December 23, has experienced before....MUCH MORE
"The Unforgiving Math That Stops Epidemics"
Complex Systems: How the Internet Grows, How Viruses Spread, and How Financial Bubbles Burst