The Asian Development Bank (ADB) has issued its first Disaster Relief Bond (DRB) offerings, also known as CAT bonds, in the Kyrgyz Republic and Tajikistan.
According to a statement by the ADB, the initiative is part of the organisation’s regional Risk-Layered Disaster Relief Finance Programme, which aims to reduce the financial impact of natural hazards and climate-related shocks.
The DRBs will provide rapid and targeted financial support following severe earthquake or flood events, based on predefined and independently verified parametric triggers. After a qualifying disaster in either country, proceeds will be disbursed through national social protection systems to support affected populations, particularly the most vulnerable.
The $80m three-year DRB for the Kyrgyz Republic has a coupon per annum comprised of compounded Secured Overnight Financing Rate (SOFR), plus a funding margin of four basis points and risk margin of 600 basis points. It was priced at par with a maturity date of 30 May 2029.
The $80m three-year DRB for Tajikistan has a coupon per annum comprised of compounded SOFR plus a funding margin of four basis points plus a risk margin of 600 basis points. It was priced at par with a maturity date of 30 May 2029.
Aon Securities acted as dealer, initial purchaser and sole bookrunner, with Munich Re acting as sole structuring agent. The analytical and advisory work was conducted by an international consortium led by WTW.