Ebola deaths pass pandemic cat bond trigger, but no payout till it spreads

The number of deaths confirmed by the World Health Organisation (WHO) from the ongoing Ebola virus outbreak in the Democratic Republic of Congo have now passed the trigger point for the World Bank’s pandemic catastrophe bond, but the outbreak still needs to spread internationally before a payout becomes due.

Artemis is told that an event report published yesterday states that the payout amount remains zero for the Class B notes from the Pandemic Emergency Financing (PEF) transaction by the World Bank’s International Bank for Reconstruction and Development (IBRD) last year.

The number of deaths reported by the World Health Organisation (WHO) has now surpassed the attachment point of 250, the latest report states that there are 457 confirmed cases and 296 deaths from the Ebola outbreak.

But, under the terms of the PEF cat bond Class B notes, a Filovirus disease (which Ebola is classified as) must cause over 250 confirmed deaths and affect more than one worldwide territory before any payout is triggered.

We’ve explained this fact in each of our recent articles on this Ebola outbreak, that spread internationally across borders is required before the cat bond notes would payout and investors lose any principal.

A regional event is classified as more than one country, up to eight, while a global pandemic would involve more than 8 countries.

If the current outbreak does spread into Sudan or another neighbouring country then a payout looks likely, at first being 30% of the $95 million Class B principal, so $28.5 million.

South Sudan, Uganda and Zambia have all been on alert for cases of the Ebola virus crossing their borders and there have been some suspected cases, but none have been confirmed by the WHO meaning a payout is for now not due.

It may not remain that way for long though and it does now look like there is a decent chance that the Ebola outbreak will spread, as the number of cases continue to rise.

There have also been cases noted that have moved internally within the DRC, from one province to another. So it may only be a matter of time until cases are confirmed in a neighbouring country.

But it is important to continue to note the finer details of the trigger conditions, that it requires the confirmed deaths number to surpass the trigger attachment point as well as regional or global spread to occur before this cat bond officially faces a loss.