"Coronavirus: The World Bank should care that the public does not understand its pandemic bonds"
Although the WHO declaration of "PANDEMIC" was not required for payout you'd think the money would have started flowing right? I mean both of the important triggers tripped, secondary markets have already marked the riskiest tranche down to zip but none of the relatively paltry $320 million has started moving.From Artemis April 13:
As we said during the last Ebola pandemic, these things appear to be designed and structured to not pay out.
Here with some defense is EuroMoney:...
The World Bank issued pandemic catastrophe bonds, as well as the pandemic risk-linked swaps that were issued at the same time, have not yet been triggered by the Covid-19 coronavirus pandemic as the growth rate hasn’t reached the necessary level to breach the parametric trigger.
No loss payment is due at this time, as the first calculation agent report found that the growth rate has not been “exponential” in the first period that the numbers have been run for.
The calculation agent process will be run again on a rolling basis from now, so the chance of a loss payment and loss of investor principal coming due remains very high and the investor principal in the reinsurance trust backing the pandemic cat bonds still looks likely to be called upon to support some of the most in-need countries with their response to the coronavirus.
As we explained in our last article on the World Bank’s pandemic bonds and swaps, the global impact of the Covid-19 coronavirus pandemic has more than surpassed the levels needed to trigger the instruments.
The trigger conditions for number of confirmed cases and deaths have been far exceeded, while the 12 week point term of the outbreak that is also a trigger condition was met on March 23rd.
The final important trigger input is the growth rate, which is calculated by comparing the rate of growth in IDA/IBRD countries over a rolling period....MUCH MOREThe 3-year notes mature in July 2020.
For our outro, some more recycling, this time from February:
World Bank Pandemic Catastrophe Bond Under Pressure As Coronavirus Spreads
I have become convinced these things were designed to NOT pay.
As noted previously:
Reinsurance: "No coronavirus price response from World Bank’s pandemic cat bond yet"We saw with Ebola that, even after both triggers—1) a minimum 250 victims and 2) the crossing of an international border—were reached, the World Bank's Pandemic Emergency Facility was very reluctant to declare the payout, eliciting some snark from yours truly:"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."
