We are now joined by Artemis who provide some details which make it appear the bonds (actually 3-year notes) were structured to never actually be triggered.
If so, someone is playing a nasty little game.
So now the real story may be the terms of the Pandemic Emergency Financing Facility rather than the possible triggering:
"And if the cross-border contagion is reported on a day ending in a 'Y' all contracts will be null-and-void and coverage denied."From Artemis:
Ebola outbreak crosses border, risk of pandemic cat bond triggering rises
12th June 2019
The risk that the World Bank’s pandemic catastrophe bond transaction triggers and makes a payout appears to have risen significantly, as the World Heath Organisation (WHO) reports that the Ebola outbreak in the Democratic Republic of Congo has now spread across the border to Uganda....MUCH MORE
The WHO said that it has now confirmed a case of Ebola Virus Disease in Uganda, noting that it is the first confirmed case to be found in Uganda during the Ebola outbreak on-going in the neighbouring Democratic Republic of the Congo.
The confirmed case is a 5-year-old child from the Democratic Republic of the Congo that had travelled into Uganda with its family.
The Ugandan The Ministry of Health and the WHO have dispatched a Rapid Response Team to the region where the case was found, to identify other people who may be at risk from its spread.
So far there are no other confirmed cases in Uganda.
The spread of the disease outbreak across borders is one of the necessary factors that could cause one tranche of the World Bank’s IBRD CAR 111-112 catastrophe bond that backs the Pandemic Emergency Financing Facility (PEF) to default and payout some of its principal.
The so-called Insurance Window of the PEF, which consists of $105 million of pandemic risk linked swaps and the $320 million of pandemic catastrophe bonds, which provide the necessary reinsurance capital to back the facility, has so far not been triggered by the Congo Ebola disease outbreak as it has remained contained within the single country.
The trigger for the $95 million of higher risk Class B cat bond notes that were issued to support the Pandemic Emergency Financing (PEF) transaction by the World Bank needs to see the number of confirmed deaths from the outbreak pass a pre-defined trigger point.
There also needs to be a certain rolling number of cases being confirmed at the time of the triggering, while the disease also needs to have spread internationally and at the same time a growth factor in terms of the rate of new cases being reported, must also all be met in order for the trigger to be breached.
So far the number of confirmed deaths from the Ebola outbreak in the Congo has more than exceeded the necessary level, currently standing at 1,396, far exceeding the trigger point of 250 deaths.
Now, the disease has spread internationally as well, which is another trigger parameter that is a requirement to be met before any payout could come due from the pandemic cat bond notes and the reinsurance related capital backing them.
That is the first, and probably the last time Climateer Investing beat Artemis to the punch on a cat bond story.
