SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Wednesday June 28th saw the launch of the first-ever ‘pandemic bond’ by the World Bank, with the aim to finance rapid response to disease outbreaks.

How this works:

  • $500 million raised through this bond issuance supports a Pandemic Emergency Financing Facility (PEF). This facility, created in the aftermath of the 2014 Ebola outbreak in Africa, which saw thousands dead, is designed to channel funds to developing countries facing the risk of a pandemic.
  • The bondholders receive coupons ‘that replicate an insurance premium plus a funding spread, in return for a payout if the bond is triggered’.
  • In the event of a trigger, ‘some or all of the principal is transferred to the PEF trust fund’ instead of repayment to the bondholders.

With quicker funds surging into pandemic-stricken areas, the outbreak can be better handled and more lives can be saved. Similar to catastrophe bonds, investors not only reap the returns from their investment, but also gain the ability to do social good at the same time.

According to Reuters, this issuance was oversubscribed by 200 percent.

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