By Ovunc Kutlu
ISTANBUL (AA) - The World Bank announced Tuesday that it partnered with Honk Kong to list a $350 million catastrophe bond to provide Chile financial protection against severe earthquake events for the next three years.
The bond is the first of its kind for the World Bank and to be listed on the Hong Kong Exchange and Clearing Limited (HKEX).
"It is the largest ever single-country catastrophe risk transfer transaction," the bank said in a statement.
The bond is part of a $630 million aggregate earthquake risk coverage transaction for Chile that also includes $280 million in catastrophe swaps, according to the international financial institution.
Hong Kong Insurance Authority Chairman Stephen Yiu said the catastrophe bond and swap are the largest of their kinds for a single country led by the bank, as well as the first insurance-linked security to be listed on the Hong Kong Stock Exchange.
"Given that the frequency and intensity of natural disasters are on the rise, Hong Kong will continue to offer staunch support as a risk management center to bolster safety and resilience of the global community," he added.
The World Bank said Chile’s high exposure to earthquake risks can significantly affect its government’s budget, adding the new instruments offer "financial resilience as part of a broader government strategy of disaster risk preparedness and fiscal responsibility.”
A 5.6-magnitude earthquake struck March 21 in central Chile while an 8.8-earthquake in 2010 was one of the strongest in the country, after a massive 9.5-magnitude tremor hit in 1960.
Chile agreed last week on an insurance program with the World Bank that provides $630 million worth of coverage for damages resulting from earthquakes.
The World Bank announced Feb. 9 it will initially provide $1.78 billion for Türkiye’s recovery and reconstruction efforts in the wake of two powerful earthquakes. The assistance aims to help relief and recovery efforts that have already resulted in massive loss of life, injuries and very significant damage in and around southern Türkiye, it said in a statement.
An initial help worth $780 million is offered and an additional $1 billion is being prepared to support those affected to provide recovery and reconstruction.