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With more than 2 million cases reported globally and 130,000 deaths, bond payoffs had yet not been triggered. The missing criteria, according to the bank, was: an “exponential growth rate” of the virus in eligible countries.
The World Bank’s catastrophe bonds, launched in 2017 in the wake of the Ebola outbreak, were designed to provide “surge funding” to poor countries in the event of another pandemic. If triggered, the bonds would release $132.5 million to emerging markets to combat COVID. Investors, meanwhile, have enjoyed yields as high as 14%. “You can see the thing coming like a train, and these countries are going to need a response,” Andrew Farlow, a University of Oxford economist who studies pandemics told Bloomberg, which first reported the news. “It’s bizarre and counterproductive that you have to wait.” Moreover, COVID bonds are taking the spotlight from glitzier green bonds, a fast-growing sector until COVID hit. Green bond issuance fell to just over $5 billion in March, from a combined $29 billion in the first two months of the quarter, and $15 billion in March 2019, according to Environmental Finance. But this is expected to be temporary. Green bonds, like their ESG equity cousins, have outperformed in the downturn so far.
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