COVID-19 likely to trigger $132.5 mn payouts sponsored by WBG’s pandemic catastrophe bonds

The current Coronavirus Disease (COVID-19) outbreak will likely trigger payouts for $ 132.5 million in pandemic catastrophe bonds sponsored by the World Bank Group's (WBG) Pandemic Emergency Financing Facility (PEF), said DBRS Morningstar credit ratings agency on Tuesday.

PEF is a financing mechanism housed at the World Bank. It is designed to provide an additional source of financing to help the world’s poorest countries respond to cross-border, large-scale outbreaks.

The Canada-based agency in a media statement said that this funding would be provided to eligible countries to mitigate the impact of the outbreak and might validate the need for market-based mechanisms to deal with pandemics.

In 2017, the International Bank for International Reconstruction and Development (IBRD), which is a part of the World Bank established the PEF following the cross-border 2014–15 West African Ebola virus outbreak, which caused more than 11,000 deaths. This outbreak proved the need for an established funding mechanism to mitigate pandemics in developing countries, the credit rating agency said in the statement.

The IBRD and the International Development Association (IDA), which is again a part of World Bank in collaboration with the World Health Organization (WHO) and other public- and private-sector partners, designed the PEF to provide surge funding for response efforts in eligible countries to help prevent rare, high-severity disease outbreaks from becoming pandemics, the statement said.