Political Economist

Top Menu

  • Home
  • About us
  • Contact us

Main Menu

  • Local News
  • World News
  • Business & Economy
  • Sports
  • Commentaries
  • Home
  • About us
  • Contact us

logo



Political Economist

  • Local News
  • World News
  • Business & Economy
  • Sports
  • Commentaries
  • ITF says charges of nepotism, marginalization of Muslims baseless

  • Osinbajo, Anyim, Obi, Muhammed-Bande, others discuss Patriotism, Security, National Development

  • LAGOS DISSOLVES BOARDS OF STATE SPORTS ASSOCIATIONS 

  • Power transmission hits peak of 5,615.40MW; no improvement in supply – consumers

  • Oil industry losing investments to non-passage of PIB – Okowa

World News
Home›World News›Coronavirus: World Bank pandemic bond under pressure as investors fear losses 

Coronavirus: World Bank pandemic bond under pressure as investors fear losses

By Admin
February 20, 2020
257
0

A World Bank bond designed to deliver funding to help the world’s poorest countries to tackle fast-spreading diseases has lost half its value as the coronavirus outbreak in China has fanned fears that investors could face hefty losses.

After the 2013-2016 Ebola outbreak that ravaged Sierra Leone, Guinea and Liberia and killed at least 11,300 people, the World Bank launched bond and insurance instruments under its Pandemic Emergency Financing umbrella in 2017 to establish a mechanism that would speedily deploy funds where needed.

However, the World Bank’s two so-called pandemic bonds came under scrutiny after the second-worst Ebola outbreak on record.

The 2018 epidemic in the Democratic Republic of Congo raged for about a year and killed more than 2,000 people, but it failed to trigger the release of funds to help affected countries.

The bonds, issued by the World Bank’s International Bank for Reconstruction and Development (IBRD), offer investors high coupons in return for the risk of having to forgo some or all their money in the event of pandemic outbreaks of a number of infectious diseases, with the funds channeled instead to countries in need of aid.

With the coronavirus outbreak having infected more than 74,000 people and claimed more than 2,000 lives, prices for the IBRD pandemic bond with the highest investment risk – the Class B notes – have come under increasing pressure.

Losses to investors depend on the number of deaths and geographical spread. In the most extreme case, a global outbreak – defined as more than 2,500 deaths across more than eight countries with a certain number of fatalities in each country – will wipe out the bondholder’s entire investment.

Offer prices quoted by one broker have slipped as low as 45 cents in the dollar, while another is quoting 62.5 cents, market sources said. In the midst of the 2018 Ebola outbreak the bond traded at a little more than 70 cents.

“The market is clearly starting to price in a chance that the tranche most at risk could be affected,” said an investor who holds some of the World Bank’s pandemic debt.

“We all get the feeling that epidemics have become more and more frequent – we had SARS and Ebola and swine flu all within a short space of time.”

Reuters reports that the bonds issued by the IBRD are not only aimed at providing relief for outbreaks of coronavirus or Ebola, but also for pandemics caused by infectious diseases such as Marburg, Crimean-Congo hemorrhagic fever or Lassa fever.

Both of the bonds are often closely held and largely illiquid. Filings show that the riskiest of the two, maturing on June 15, is held by asset managers including Baillie Gifford, Amundi and Oppenheimer.

The second of the bonds – a $225 million issue is also exposed to a coronavirus outbreak but considered less at risk because its different trigger criteria means bondholders face a loss of 16.7%.

For all the good intentions and the prospect that a payout to poor countries might be on the cards, the bonds remain under fire for failing to deliver sufficient or timely aid.

One point of contention is the length of time before a payout is triggered. In the case of a coronavirus outbreak for the Class B notes, this is 84 days from when the World Health Organization (WHO) publishes its first “situation report”. In the current outbreak, that would be in mid-April.

Think tanks and some policymakers say the focus should be on shoring up healthcare systems and early detection facilities in vulnerable parts of the world that are already overburdened with cases of Ebola, measles, malaria and other deadly diseases.

“The money for these bonds could have been better spent in providing the WHO with funds or help strengthen healthcare provisions in poor countries at risk,” said Bodo Ellmers, director of sustainable development finance at Global Policy Forum, an independent policy watchdog.

“It was an ideology-driven idea to get the private sector involved in humanitarian and emergency finance – and I think we have to say this has failed.”

The World Bank said that if the activation criteria for the instruments were to be met, funding would be triggered to support countries.

 

TagsAmundiBaillie GiffordIBRDSARSWHO
Previous Article

Namibia becomes first African country to export ...

Next Article

Court sentences ex-Unilag lecturer to 21 years ...

Related articles More from author

  • Press Releases

    Premium Times demands release of its reporter, police freeze reporter’s bank account

    August 15, 2018
    By Admin
  • Ayade
    Local News

    Cross River Govt Condemns Looting of WHO facility

    October 31, 2020
    By Admin
  • World News

    WHO sounds alarm on Ebola, says unable to stamp out virus due to Congo insecurity

    November 23, 2019
    By Admin
  • Senate
    Local News

    WHO: Trump’s decision will affect Africa in the fight against COVID-19 – NIMR DG

    April 16, 2020
    By Admin
  • Breaking NewsLocal News

    Suspected killer of Funke Olakunrin, 2 others test positive for coronavirus in Ondo

    April 26, 2020
    By Admin
  • Wuhan
    World News

    WHO Scientists To Visit China For Investigations Into COVID-19 Origins

    January 11, 2021
    By Admin

You may be interested

  • Local News

    Champions League trouble: Eight Leicester fans jailed in Spain

  • public health
    Local News

    Lagos: Schools to reopen August 3; Facemask defaulters to be prosecuted – Sanwo-Olu

  • Local News

    Buhari dumps Oshiomhole as more petitions pour in; he must go – VON DG

logo

Political Economist is a liberal news magazine with global affiliations.

We promote free enterprise and act as a catalyst for the growth of knowledge economy. We are proudly pan-Nigeria yet richly spiced with African and global news. We offer a fair and balanced news reportage presented by our team of well-heeled professional journalists...

About us

  • 5 Olutosin Ajayi Street, By CPM Church, Ajao Estate, Lagos State, Nigeria
  • +234 805 680 1124
  • info@politicaleconomistng.com
  • Recent

  • Popular

  • Comments

  • National Theatre Lagos

    National Theatre: Concessionaire warns against handover to CBN, says matter in court

    By Admin
    March 7, 2021
  • Shake up in the Army

    Shake up in the Army: Attahiru appoints new GOCs, PSOs, others

    By Admin
    March 7, 2021
  • Obafemi Awolowo University

    Obafemi Awolowo University announces resumption dates for practical courses

    By Admin
    March 7, 2021
  • Yemi Osinbajo

    NATION-BUILDING IS HARDWORK, SAYS OSINBAJO AT FORUM ORGANISED BY DIASPORANS, SAYS FG CAN’T GRAB LAND

    By Admin
    March 6, 2021
  • Jonathan Sacks IGP Abba, Appoints Arase

    By Admin
    April 21, 2015
  • Zinox iPower Inverter Claws to Market Dominance

    By Admin
    November 24, 2014
  • Police foil another suicide bomb attempt in Borno, kill three bombers

    By Admin
    April 24, 2017
  • Your Kidney is Your Life, Watch Your Lifestyle, Counsels Dr. Amira

    By Admin
    February 27, 2015
  • Justopec
    on
    April 24, 2017

    Police foil another suicide bomb attempt in Borno, kill three bombers

    Good one for the ...
  • Justice Shedrack
    on
    April 24, 2017

    Police foil another suicide bomb attempt in Borno, kill three bombers

    Nice
  • Anonymouse
    on
    February 8, 2017

    Qatar Airways makes history, completes first longest non-stop flight of 16 hours from Doha to New ...

    This is nice...
  • Justice Shedrack
    on
    January 19, 2017

    Confusion in Gambia, Jammeh stays put, Barrow to be sworn in at Gambia embassy in Senegal

    Na wa ooooo

Find us on Facebook

Follow us

  • Home
  • About us
  • Contact us
  • Privacy Policy
© Copyright Political Economist. All rights reserved.