Colombia, Peru, Caribbean nations consider new World Bank cat bonds

According to a report from Bloomberg, the governments of Colombia and Peru and also Caribbean nations, are among those considering sponsoring World Bank facilitated catastrophe bonds, as activity in the market continues to pick up.

Colombia and Peru were both beneficiaries under the landmark multi-country Pacific Alliance catastrophe bond deal in 2018.

But that issuance matured and neither sought any renewal.

That was until now, with Chile having just secured a significant $630 million of earthquake protection, across $350 million of catastrophe bonds and $280 million of catastrophe swaps, both facilitated by the World Bank and issued by the IBRD.

“Chile issued in 2018 and now they’ve come back,” Michael Bennett, head of market solutions and structured finance at the World Bank told Bloomberg. “We expect that it will help generate more interest in our different member countries that are catastrophe-risk vulnerable.”

Now, according to Bloomberg, Colombia has confirmed it is working on the structure of a potential transaction that would cover it against the costs of excess rain including flooding, a government representative said.

Meanwhile, Bloomberg also reports that Peru is holding exploratory talks with the World Bank about a transaction to cover earthquake risk, a government official told the publisher.

Bennett also told Bloomberg that Jamaican countries are working with the World Bank on a possible regional catastrophe bond.

That could be interesting as an additional source of insurance and reinsurance protection to the regional catastrophe risk pool the CCRIF.

It’s reported that Jamaica may participate in any multi-country Caribbean catastrophe bond deal, despite having secured its own and first cat bond in 2021.

We reported that a multi-country Caribbean cat bond deal was possible back in 2022.

It’s encouraging to hear of the traction the World Bank has with a number of countries, suggesting we could see a more robust flow of sovereign cat bond deals through the next few years.

Watch our recent video interview with Jorge Familiar, Vice President and Treasurer of the World Bank.