World Bank confirms signing of Nepal quake catastrophe bond mandate

The World Bank has now confirmed that it has partnered with Nepal to explore the issuance of a parametric earthquake catastrophe bond for the country.

The World Bank confirmed that it and Nepal have signed a mandate agreement to explore the development of a catastrophe bond, which would be designed to enable Nepal to access funding quickly in case a major earthquake occurs.

Back in July, we reported that the World Bank had begun working on a proposed project to deliver a parametric earthquake catastrophe bond for Nepal, targeting between US $80 million and up to US $190 million of fully-collateralized disaster risk financing from the capital markets for the South Asian country.

We also said at that time that the proposed project envisages delivery of the design, structuring, and issuance of a three-year parametric catastrophe bond for Nepal.

Earlier this month, we further reported that Nepalese news sources said the country’s government Council of Ministers had now approved the signing of a Mandate Agreement for the Nepal Earthquake Catastrophe Bond project with the World Bank.

That agreement is now signed, according to the World Bank, meaning the project is more formally underway.

The World Bank stated, “The agreement marks the beginning of a collaboration to assess how capital markets can support Nepal’s broader disaster risk management strategy.

“As one of the world’s most disaster-prone countries, Nepal is working to better prepare for, withstand, and recover from future natural disasters through a combination of risk reduction, preparedness, and financial protection measures.”

While also adding that, the World Bank Group Treasury will now work closely with the Government of Nepal and market participants, across the structuring and insurance-linked securities community, to assess the feasibility and potential structure of any catastrophe bond transaction.