The World Bank has issued $1.36 billion of sustainable
development catastrophe bonds that will function as insurance
in the event of an earthquake for the four Latin American
countries in the Pacific Alliance.
For Chile, Colombia and Peru this is the first such issuance
but Mexico received a $150 million pay out following the 8.1
magnitude earthquake in Chiapas in September 2017.
According the World Bank, it is also the largest sovereign
risk insurance transaction, and the second largest catastrophe
(CAT) bond issuance to date. The offering consisted of five
bonds in total; two for Mexico at $100 million and $160
million, $500 million for Chile, $400 million for Colombia and
$200 million for Peru.
CAT bonds are structured specifically to get protection that
is funded by the market, implying that an issuance of a debt