COSEFIN countries seek joint World Bank catastrophe bond

COSEFIN countries seek joint World Bank catastrophe bond

The Council of Ministers of Finance of Central America, Panama and the Dominican Republic (COSEFIN) intends to tap into the capital markets for catastrophe insurance security through a joint catastrophe bond issuance, with the support of the World Bank.The COSEFIN nations currently gain from parametric disaster insurance defense through the CCRIF SPC, however having seen the success of Jamaicas single-country catastrophe bond in the last year, these countries are checking out an opportunity to secure multi-country cat bond protection with the World Banks assistance.
The World Bank has had a job open for some years to offer input and assistance to the catastrophe risk funding requirements of the Central America and Caribbean nations.
COSEFIN, as a particular group of the Ministers of Finance of federal governments in the area, fulfilled recently and catastrophe bonds were a subject of discussion.
In broader disaster danger management terms, protecting an additional layer of protection from the capital markets is seen as a way to lower fiscal risks from disasters and secure their economies.
At the exact same time, it was acknowledged that disaster bond issuance could be more efficient and the coverage more cost-effective if a joint technique is embraced by the COSEFIN nations.
The region is viewed as extremely vulnerable to a variety of natural catastrophes, from earthquakes to typhoons and the Ministers of Finance identify the requirement to better secure their financial budgets and also decrease their reliance on obtaining to recover from natural disaster occasions.
The COSEFIN meeting agreed that a joint catastrophe bond would be a positive initiative to pursue and determined dealing with the World Bank on this as the ideal route to pursue.
They will now examine disaster bonds as an instrument and try to recognize whether it would be economically possible for the COSEFIN nations, while also aiming to find out from other nations experiences in the cat bond market.
As with any such effort, there is no warranty a COSEFIN sponsored catastrophe bond will ever make it to market and current World Bank issues have actually taken years to facilitate, so this is maybe simply the start of a long procedure for the federal governments of the COSEFIN area.
The World Bank through its IBRD Capital-At-Risk Notes Program has actually already brought one joint feline bond concern to market, for the Pacific Alliance members.

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