SINGAPORE, November 25, 2019 – The Singapore Exchange (SGX) today hosted a ceremony to celebrate the listing of two World Bank Philippines Catastrophe Bonds (cat bonds) which finance up to US$225 million of financial protection against earthquakes and tropical cyclones for the Republic of the Philippines over the next three years. This is the first World Bank (International Bank for Reconstruction and Development, IBRD) bond ever listed on SGX, the first cat bond ever listed on an Asian exchange, and the first cat bond ever sponsored by an Asian sovereign.
Asia is home to roughly one-third of the world’s natural catastrophes. The negative impact of catastrophes on the region’s economy is exacerbated when governments are forced to divert money from other developmental priorities to finance disaster response and recovery. When large events strike poor countries, the impact of this fiscal strain on government budgets can last for years, or even decades.
The World Bank cat bonds for the Philippines, which are supported by the Monetary Authority of Singapore (MAS), are an example of how the capital markets can provide financial solutions to address this insurance gap.
The World Bank has played a key role in developing the ILS market. The World Bank first entered the catastrophe bond market in 2009 advising a sovereign client on cat bonds to address the financial impact of earthquakes and hurricanes. In 2014, the World Bank issued its first cat bond. Since then, including the cat bond issuance for the Philippines, the World Bank has provided almost US$4.5 billion in insurance coverage for clients through risk transfer market transactions, all of which offer risk diversification for investors.
“We welcome the listing of the first sovereign catastrophe bond in Asia for the Philippines on the Singapore Exchange,” said Ms. Jacqueline Loh, Deputy Managing Director, Markets & Development, Monetary Authority of Singapore. “Alternative risk transfer mechanisms such as catastrophe bonds provide sovereign and private sector entities access to a diversified pool of investors and capital. As a leading risk management centre, Singapore is well positioned to support the issuance of catastrophe bonds and other insurance-linked securities and contribute to strengthening disaster and climate risk resilience in Asia.”
“We are very excited about this landmark catastrophe (cat) bond listing that marks many ‘firsts’ in Asia,” said Loh Boon Chye, Chief Executive Officer Singapore Exchange. “We hope the listing of this first cat bond on an Asian exchange will pave the way for the development of such insurance-linked securities in Asia, which will provide investors globally with another avenue for portfolio diversification. With growing awareness of Environmental, Social and Governance (ESG) considerations in investment decisions, cat bonds are also being recognized for their potential social impact. As Asia’s largest listing venue for international debt securities, we will continue to support the growth of new products and structures in the debt capital markets.”
“The World Bank Catastrophe Bond for the Philippines is a great illustration of how countries can partner with the World Bank to find climate solutions addressing resilience,” said Jingdong Hua, World Bank Vice President and Treasurer. “Singapore’s efforts in developing the insurance-linked securities market aligns with the World Bank’s twin goals to end extreme poverty and boost shared prosperity. We appreciate the efforts of the Monetary Authority of Singapore and Singapore Exchange in highlighting the World Bank cat bond as an exemplary insurance solution in Asia and look forward to working with other sovereigns as they consider similar mechanisms to provision for catastrophe risks.”
Disclaimers:
This press release is not an offer for sale of securities of the International Bank for Reconstruction and Development ("IBRD"), also known in the capital markets as "World Bank". Any offering of World Bank bonds described herein takes place solely on the basis of the relevant offering documentation including, but not limited to, the Prospectus, the Prospectus Supplement, the Final Terms and any related legal documentation. Investing in the bonds described herein is speculative and involves a high degree of risk including the risk of a total loss of principal amount of the applicable Class. The bonds will be offered and sold, and may be reoffered and sold, only to investors who (i) are “qualified institutional buyers” within the meaning of Rule 144A under the United States Securities Act of 1933, as amended, and (ii) are residents of and purchasing in, and will hold the bonds in, a permitted U.S. jurisdiction or a permitted non-U.S. jurisdiction (and meet the other requirements set forth under “Notice to Investors” in the Prospectus Supplement). The bonds will not transferable except in accordance with the restrictions described under “Notice to Investors” in the Prospectus Supplement.
Net proceeds of the bonds described herein are not committed or earmarked for lending to, or financing of, any particular projects or programs, and returns on the bonds described herein are not linked to the performance of any particular project or program.
About the World Bank
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization created in 1944 and the original member of the World Bank Group. It operates as a global development cooperative owned by 189 nations. It provides its members with financing, expertise and coordination services so they can achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global economic and environmental problems. The World Bank has two main goals: to end extreme poverty and promote shared prosperity. It seeks to achieve them primarily by providing loans, risk management products, and expertise on development-related disciplines to its borrowing member government clients in middle-income countries and other creditworthy countries, and by coordinating responses to regional and global challenges. It has been issuing sustainable development bonds in the international capital markets for over 70 years to fund its activities that achieve a positive impact. Information on World Bank bonds for investors is available on the World Bank Treasury website: www.worldbank.org/debtsecurities.
Contact
Heike Reichelt, Head of Investor Relations and New Products, World Bank Treasury: debtsecurities@worldbank.org
