IBRD CAR Jamaica 2026

The Government of Jamaica has returned for what will be its third catastrophe bond issuance with the support of the World Bank and IBRD, as the country looks to renew a vital piece of its disaster risk financing infrastructure following the triggering and payout in full of its second cat bond after hurricane Melissa in 2025.

As with Jamaica’s previous catastrophe bonds, the notes will be issued by the World Bank’s International Bank for Reconstruction and Development (IBRD) under its global debt issuance facility and the Capital-At-Risk notes program.

The offering sees a single $150 million tranche of catastrophe-linked capital-at-risk notes being offered to cat bond investors, with the proceeds from their sale set to collateralize a risk transfer agreement between Jamaica and the IBRD.

The notes will provide Jamaica with parametric disaster insurance protection against Atlantic named storm risks, so for named storms and hurricanes.

These IBRD Jamaica 2026 cat bond notes will provide the Government of Jamaica with a capital markets supported source of parametric per-occurrence protection that will run across a term covering four hurricane seasons, with maturity expected in May 2030, our sources have told us.

Like the previous catastrophe bonds for Jamaica, the parametric trigger is structured to respond based on storm location and minimum central pressure, using data from the best track files produced by the National Hurricane Center’s automated tropical cyclone forecasting system.

One change worth noting is that in this case Moody’s RMS will be the modelling and calculation agent, where the previous Jamaica cat bonds were supported by Verisk’s AIR.

The cat bond’s calculation process will see specific event parameters taken on any storm that passes through the parametric boxes that sit over Jamaica, which are in a similar construction to the 2024 deal, we understand.

The event parameters would be based on the calculated central pressure figure and also the storm track, while Jamaica and the surrounding Caribbean Sea are divided up into a series of parametric boxes. Different payout factors apply, depending on which box a storm tracks into and the minimum central pressure it has, while any payouts would be made on a linear sliding scale, with a minimum of 30% of the cat bond’s principal, running up to a full 100% payout available depending on the event parameters and severity, we are told.

We understand any hurricane with a minimum central pressure of 900mb or lower could trigger a 100% payout on passing through any of the parametric boxes, while pressures higher than that would result in different payout percentage amounts, dependent on the weighting factors for the specific parametric trigger zones a hurricane passed through.

The $150 million of Jamaica 2026 catastrophe bond notes that the IBRD is set to issue come with an initial attachment probability of 3.86%, an initial expected loss of 2.48% and are being offered to investors with a risk margin guidance in a range from 6.5% to 7.25% (the price guidance range), sources said.

Update 1:

We’re told that the target size for this third catastrophe bond for Jamaica has been increased, with now $200 million of multi-year parametric hurricane protection being sought.

At the same time the price guidance for the risk margin (spread) the notes will pay has been narrowed to between 6.75% and 7%, we understand.

Update 2:

Jamaica secured its one-third upsized target of $200 million of parametric hurricane protection with this its third catastrophe bond sponsorship.

The $200 million of IBRD CAR Jamaica 2026 were priced to pay investors an initial risk margin of 6.75%, so at the bottom of the reduced guidance and so within the lower-half of the initial guidance range.

Specialist insurance-linked securities (ILS) funds took the majority of this new issuance, which the World Bank said was oversubscribed.

The World Bank said that, in terms of investor distribution, 69% went to dedicated ILS funds, 25% to other asset managers and 6% to insurance or reinsurance companies.

In terms of geographic distribution, European investors took 42% of the offering, North American investors 41%, Bermuda based investors took 18% and Asia or Australia based investors took 1%.