Kyrgyz Republic & Tajikistan parametric cat bonds from the ADB could upsize slightly

The first two parametric catastrophe bonds to be issued directly by the Asian Development Bank (ADB) on behalf of its member countries the Kyrgyz Republic and Tajikistan are now targeted for a slight upsizing to as much as $80 million each, while the pricing for the risk margin each set of notes will pay has risen to the upper-ends of guidance.

As we’d reported earlier this month, the Asian Development Bank (ADB) launched its first offerings of catastrophe bonds, with the initial target being to secure $75 million in parametric earthquake and extreme precipitation disaster risk financing from the capital markets for the Kyrgyz Republic and Tajikistan.

The two parametric cat bond issuances are being issued through the ADB’s own Global Medium-Term Note Program, as Capital at Risk notes, as the Asian Development Bank uses its own treasury facilities to issue these catastrophe-linked securities, or capital-at-risk notes, to investors.

The notes will provide an important component of the disaster risk financing under an ADB project named the Risk-Layered Disaster Relief Finance Program, which will consist of a combination of Contingent Disaster Financing (CDF) and these Disaster Relief Bonds (DRB).

Having initially targeted $75 million in parametric protection for each of the countries, we’re now told by sources that this target has slightly risen, with between $75 million and $80 million now the expected issuance sizes.

Read more details on these catastrophe bonds, including details on their parametric triggers, the risk modelling and calculation agents, and the risk metrics in our previous article.

It is the earthquake sub-limit protection that is being targeted for the slight increase in each case, we understand.

As a result, the goal now is to secure through the issuance of these first ADB cat bond notes, a sub-limit for parametric earthquake protection of between $65 million and $70 million, while the extreme precipitation or flood focused sub-limit remains at the initial $10 million.

Recall that, the earthquake sub-limit can provide for multiple recoveries if not exhausted by a first event, given the percentage based payout factors in the parametric trigger design, while the extreme precipitation sub-limit appears to be a single-shot cover that pays out once and in full if the parametric trigger attachment is breached.

In addition to seeking to slightly increase the amount of earthquake protection provided by the Kyrgyz Republic and Tajikistan catastrophe bonds, we are told the price guidance for the risk margin to be paid by investors has risen to the upper-end of initial guidance.

As a result, the Asian Development Bank – Kyrgyz Republic 2026 catastrophe bond capital-at-risk notes are now targeted at between $75 million to $80 million in size. The notes have an initial expected loss of 2.296% and were first offered to investors with guidance for a risk margin (or risk interest spread) of between 5.25% and 6%, which has now been updated to the top-end at 6%, we are told.

The Asian Development Bank – Tajikistan 2026 catastrophe bond capital-at-risk notes are also now targeted at between $75 million to $80 million in size. These have an initial expected loss of 2.011% and were also initially offered to investors with guidance for a risk margin (or risk interest spread) of between 5.25% and 6%, but that has also now been updated at the upper-end of 6%.

It’s encouraging to see that these first cat bonds from the ADB continue to make progress towards issuance, with investors seemingly accommodating of the differentiated risk offering, at the right price, while potentially set to support slightly more in earthquake protection for the two countries.

You can read all about these first Asian Development Bank catastrophe bonds in our extensive cat bond Deal Directory, listed as Asian Development Bank – Kyrgyz Republic 2026 and Asian Development Bank – Tajikistan 2026.