World Bank lists Mexican & pandemic cat bonds in Luxembourg

by Artemis on August 14, 2017

The World Bank has listed the latest catastrophe bond notes it has issued lately on the Luxembourg Stock Exchange, with the most recently completed cat bond for Mexico becoming the first property catastrophe bond to list in the country, while the previous issuance of pandemic bonds were also a listing first.

Luxembourg has not historically been a home to the catastrophe bond market in the past, but now the World Bank’s Capital-At-Risk note program, which is issued through the International Bank for Reconstruction & Development’s Global Debt Issuance Facility, means it has started to see some insurance-linked securities (ILS) activity.

The reason for listing the notes in Luxembourg is not surprising. The Luxembourg Stock Exchange has long played host to World Bank and IBRD issued debt with 297 individual series of bonds sitting on the exchange today

So with the completion of the $320 million IBRD CAR 111-112 issuance of notes to back the Pandemic Emergency Financing Facility (PEF) and the more recent $360 million IBRD / FONDEN 2017 which provide parametric disaster protection to the Mexican government, the IBRD has followed its typical processes and listed the notes in Luxembourg.

GC Securities hailed the Mexican cat bond as “the first listed property and catastrophe bond” issued under the World Bank’s Capital-at-Risk notes program.

However, while that was a first as a property catastrophe bond deal, the pandemic bonds issued almost a month before were the first pandemic risk-linked catastrophe bond or ILS notes to be listed in Luxembourg as well.

GC Securities told Artemis that this is purely a case of the IBRD following its process for securities issuances that it lists, as all result in a Luxembourg listing. The decision to list the notes in the country was not specific to the Capital-At-Risk notes.

It’s still interesting though, as Luxembourg has not had much in the way of ILS action over the years, aside from being an ILS fund domicile for some managers, particularly for UCITS ILS funds.

Choice is always a positive in any marketplace and seeing another exchange listing catastrophe bonds cannot hurt the development of the broader ILS marketplace.

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