The Caribbean island nation of Barbados is one of the first in the world we’ve heard of to embed a parametric natural catastrophe event trigger within a sovereign bond issuance, with the occurrence of a natural disaster able to trigger a deferral of payments to holders of the dollar-denominated bond.
Interestingly, Barbados has elected to work with the CCRIF (Caribbean Catastrophe Risk Insurance Facility), a provider of sovereign parametric natural catastrophe insurance to Caribbean and Central American countries, as the reporting agent of sorts for its recent bond issuance.
This isn’t a catastrophe bond, but it is another interesting way of protecting the economic interests of a country against additional burden created by the occurrence of major natural disasters.
FULL ORIGINAL PUBLICATION HERE
