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Friday, March 29, 2024

PH mulls over issue of catastrophe bonds

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THE Department of Finance is studying the possibility of sponsoring catastrophe bonds (Cat Bond) to help cover disaster-related risks in the Philippines and separate peso-denominated securities to offshore investors. 

The proposals, along with a plan to come up with SDG bonds—securities linked to attaining the United Nations’ Sustainable Development Goals—were discussed by Finance Secretary Carlos Dominguez III with executives of Citi Group on the sidelines of the Annual Meetings of the World Bank and the International Monetary Fund in Bali, Indonesia.

Jay Collins, Citi vice chairman for Corporate and Investment Banking, said the Philippine government under a Cat Bond would serve as sponsor, with the World Bank issuing the bond to qualified investors.  

Depending on the insurance coverage and its trigger, the Philippines as sponsor of the Cat Bonds will get paid the principal contributed by investors if a catastrophe occurs. But if there is no trigger, investors would make a positive return on their investment in the bonds.

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