The inaugural catastrophe bond to benefit the Philippines will also set another ILS market first, as the $225 million of notes issued through the World Bank’s IBRD CAR 123-124 cat bond transaction will be listed on the Singapore Stock Exchange (SGX).
We understand that this will be the first listing of catastrophe bond or insurance-linked securities (ILS) notes on the Singapore Stock Exchange (SGX), since it began offering listing services alongside the Singapore ILS grant program.
It’s even more noteworthy given that the first ILS listing on the SGX is a cat bond transaction from an international issuer, rather than one issued using a Singapore domiciled ILS structure.
Perhaps more interesting again, is the fact that the Philippines catastrophe bond is being issued through the World Bank owned International Bank for Reconstruction and Development’s (IBRD) Capital-At-Risk Notes program.
Securities issued by the IBRD’s Global Debt Issuance Facility, of which CAR are part, are generally listed on the Luxembourg Stock Exchange, with that exchange long playing host to World Bank and IBRD issued debt and over 400 individual series of bonds listed there today.
So choosing Singapore for the listing of the Philippines cat bond notes is a notable step, but also one that makes sense given the transaction is the first to benefit an Asian sovereign issuer.
Listing of cat bond notes is designed to enhance their secondary liquidity, adding to the transparency surrounding securities and helping to meet certain investor mandates, where listed securities are required for allocations to be made.
For some investors, the listing of ILS notes can make for an even more appealing asset class to invest in, due to requirements for securities in their portfolios to be listed and tradable.
Listing the notes on a recognised international exchange is considered an enhancement to their secondary liquidity, an additional vote of confidence in the institutional quality of the ILS product, as well as providing an additional level of rigour and transparency for ILS transactions, to the benefit of the asset class as a whole.
It’s encouraging to see the globalisation of the ILS market continuing apace with this important World Bank transaction for the Philippines, providing new options for sponsors and helping to create new markets for the transfer of global disaster and climate risks.