IBRD CAR 121-122

The triggering and impending $52.5 million payout of the Philippines catastrophe bond by recent typhoon Rai (known in the Philippines as Odette), demonstrates a “tangible result” of the country’s disaster risk financing work, according to its Finance Secretary.

The Philippines government will make a recovery under the terms of its World Bank issued IBRD CAR 123-124 catastrophe bond, as the event calculation process has now run and super typhoon Rai (locally known as Odette) has breached the parametric trigger for wind, Artemis has learned.

The government of the Philippines has drawn $80 million to help in the recovery from super typhoon Rai (Odette) from the World Bank supported catastrophe contingent line-of-credit it has in place through a Catastrophe-Deferred Drawdown Option arrangement, dubbed the CAT-DDO 4.

The Philippines Government Treasury department has now issued a notice to the calculation agent requesting that an assessment be made as to whether recent super typhoon Rai (locally known as Odette) might have triggered its World Bank issued IBRD CAR 123-124 catastrophe bond coverage.

We understand that the World Bank has been put on notice as the Philippines government hopes to trigger the $500 million catastrophe contingent line-of-credit it can receive through its Catastrophe-Deferred Drawdown Option arrangement, dubbed the CAT-DDO 4.

Super typhoon Rai, or typhoon 28W which is known locally in the Philippines as Odette, is tracking towards the country’s central and southern islands and is expected to make landfall with sustained winds as high as 160 mph, putting holders of the World Bank issued IBRD CAR 123-124 catastrophe bond on alert.

The Bureau of the Treasury of the Republic of the Philippines has issued notice to the calculation agent for its World Bank facilitated IBRD CAR 123-124 catastrophe bond transaction that it believes recent super typhoon Goni to be an applicable event that requires a calculation of the modelled losses to be undertaken.

The Philippines government’s World Bank facilitated IBRD CAR 123-124 catastrophe bond transaction is under threat from typhoon Goni, which may cause a partial loss of principal for investors in the cat bond if it maintains significant wind speeds as it approaches Manila.

The recently completed first catastrophe bond for the Philippines provides its government with faster access to post-disaster funding, enabling it to respond more rapidly and effectively to support the needs of its citizens when the largest catastrophes strike.

The Taal volcano in the Philippines which began erupting yesterday poses a potential threat to the Philippines government’s  IBRD CAR 123-124 catastrophe bond transaction, which would be on-risk should a major earthquake occur due to the volcano’s current active state.