WNAM MONITORING: The Asian Development Bank (ADB) said that it had issued its first Disaster Relief Bonds (DRBs), also known as catastrophe bonds, to help Kyrgyzstan and Tajikistan respond to earthquakes and floods.
Both Kyrgyzstan and Tajikistan are highly vulnerable to such events but have limited fiscal capacity and risk transfer mechanisms to respond effectively.
“With this inaugural sovereign catastrophe bond, our developing member countries in Central Asia gain rapid, committed financing when disaster hits, so they can build back faster. This bond will pave the way for future issuances, and over time deepen investor engagement in this dynamic region,” said ADB Vice-President for Finance and Risk Management Roberta Casali.
The DRBs are designed to provide rapid liquidity following severe earthquake or flood events. Once a qualifying disaster occurs, funds will be disbursed through national social protection systems to support affected populations, particularly the most vulnerable.
ADB issued separate three-year bonds worth $80 million each for the two countries. Both instruments carry a coupon composed of the compounded Secured Overnight Financing Rate (SOFR), plus a funding margin of 4 basis points and a risk margin of 600 basis points. The bonds were priced at par and are set to mature on May 30, 2029.
The offerings attracted broad investor interest. For the Kyrgyzstan tranche, 64% of the bonds were placed in Europe and 36% in the Americas. By investor type, 37% went to specialized insurance-linked securities funds, 32% to insurance and reinsurance companies, and 31% to fund managers.
For the Tajikistan tranche, 60% of the bonds were placed in Europe and 40% in the Americas. By investor type, 36% went to insurance-linked securities funds, 33% to insurance and reinsurance firms, and 31% to fund managers.
“We are delighted by the strong response from the global investor community, whose support has further enabled the transfer of sovereign disaster risk from the public to the private sector,” said Jordan Brown, Managing Director for Asia Pacific at Aon Securities, which acted as dealer, initial purchaser, and sole bookrunner for the transaction.
