World Bank issues $360 million Mexico catastrophe bonds

08/04/2017 Reuters

financeNEW YORK, Aug 4 (Reuters) – The World Bank will issue $360 million in three-year catastrophe bonds on behalf of Mexico, the organization said on Friday, to be paid out in the event of hurricanes or earthquakes that devastate the country.

The bonds are part of World Bank’s capital-at-risk notes program, created in 2014, which World Bank officials say aims to transfer risks related to natural disasters from developing countries to capital markets. The bonds are designed to cover costs of immediate emergency relief functions.

If a natural disaster occurs, some or all of the bond proceeds will be made available to the Mexican Fund for Natural Disasters, or FONDEN, provided it meets criteria set forth by the U.S. Geological Society or U.S. National Hurricane Center.

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