world bank

The Governments of Saint Vincent and the Grenadines have received $20 million in disaster risk financing support from the World Bank to aid their recovery from the recent eruption of the La Soufrière volcano, after a catastrophe contingent line of credit was triggered.

The efforts of the World Bank around disaster risk financing for its members continues to be a real benefit, and while the organisation can and will do more, this isn’t about being the dominant force in the market, according to Michael Bennett, Head of Derivatives & Structured Finance, World Bank Treasury.

The World Bank sees the insurance-linked securities (ILS) sector providing significant benefits for member country governments, but elements of the catastrophe bond structure could be adapted to make it an even more attractive tool for sovereign disaster risk financing.

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.

A number of countries have benefited from disbursements under World Bank provided catastrophe contingent lines of credit after the Covid-19 coronavirus pandemic triggered their Catastrophe-Deferred Drawdown Options (CAT-DDO’s).

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 World Bank has helped two more countries join those benefiting from a source of catastrophe contingent disaster risk financing, as both Vanuatu and Grenada become the latest to receive a Catastrophe Deferred Drawdown Option (Cat DDO) arrangement.

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.

The African countries of Madagascar and Morocco are the latest to benefit from a Catastrophe Deferred Drawdown Option (Cat DDO) instrument issued by the World Bank, as further steps are taken to make them more resilience to natural disasters and climate related risks.