The World Bank issued USD$150 million Catastrophe Bond to Mexico

For the country's economic reactivation after the devastating earthquakes that hit the country, an 8.2-magnitude quake on Thursday, September 7, followed by a 7.1-magnitude quake on Tuesday, September 19
Lomas de la estrella, Iztapalapa borough - Photo: File photo/EL UNIVERSAL
10/10/2017
19:39
Leonor Flores
Mexico City
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The World Bank issued the Catastrophe Bond Mexico contracted for USD$150 million (MXN$ 2.7 billion) for the country's economic reactivation after the devastating earthquakes that hit the country, an 8.2-magnitude quake on Thursday, September 7, followed by a 7.1-magnitude quake on Tuesday, September 19.

Mexico's Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público abbreviated SHCP) informed that technical and geological evaluations (latitude, length, magnitude, depth) have ended today.

The payment will be received by Mexico's National Disaster Fund (Fondo de Desastres Naturales abbreviated Fonden) to channel additional resources for the reconstruction of schools, hospitals, highways, and houses.

The Catastrophe Bond was renewed as a risk transfer mechanism on August 4. This mechanism called Catastrophic Bond "Fonden Cat 2017", provides protection to the assets of the FONDEN Trust for 3 years.

The Catastrophe Bond provides USD$150 million in earthquake coverage, USD$110 million in hurricane coverage on the Atlantic coast and USD$110 million in hurricane coverage on the Pacific coast.

In this transaction, it stands out that a total of 37 investors participated.

Catastrophic coverage is a national risk transfer policy strategy to maintain strong public finances. Mexico has a comprehensive risk management structure and a solvent insurance sector that will enable the country to cope with the recent natural disasters.

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