(COVID/ETC CONTENT HERE) China Locks Down 11 Million in Wuhan,

[teufelhund1918]

“Scheduled Maturity Date: July 15, 2020”

W T F
Someone please review this and tell me I’ve got this straight. Investors purchased in June 2017 and wouldn’t get paid, unless a pandemic hit before the maturity date in July 2020? World Bank, WHO, G7 all mentioned in article.

World Bank Launches First-Ever Pandemic Bonds to Support $500 Million Pandemic Emergency Financing Facility

https://www.worldbank.org/en/news/pr...ncing-facility

“ The PEF covers six viruses that are most likely to cause a pandemic. These include new Orthomyxoviruses (new influenza pandemic virus A), Coronaviridae (SARS, MERS), Filoviridae (Ebola, Marburg) and other zoonotic diseases (Crimean Congo, Rift Valley, Lassa fever).”

Wow.... wow.... WTF??? Kinda weird how this plays out either way with the Chinese virus hitting.

[VARIABLE9]

Wow.... wow.... WTF??? Kinda weird how this plays out either way with the Chinese virus hitting.

I wonder if an ‘investor’ could write off this type of investment, should the pandemic occur, as a charitable contribution or something similar?

[Life's a Hillary]

It's the opposite. Investors get paid in full only if there is NOT a pandemic of the specified types. See this statement:

"The Notes will not be fully repaid if an event occurs"

The press release there doesn't explain it well, but this is a common though rarely publicized type of insurance called catastrophe bonds. Investors bet that some event will NOT happen, and if they are right then they get high interest payments at maturity. If they are wrong, their interest AND principal are at risk. For COVID-19, I'll bet the entire bond amount gets used up for pandemic relief and investors get nothing at all.

WHO actually delayed calling this a pandemic for a month longer than they should have, most likely because of this bond issue.

Press articles:

https://www.fool.com/investing/2020/...means-for.aspx

https://www.reuters.com/article/us-c...-idUSKBN20D2HI

https://www.forbes.com/sites/amiyato.../#778a9b323b7e

The whole time people were screaming for WHO to call it a pandemic I was saying it was this exact thing that was the delay for it.

[SomeOtherGuy]

Thanks for explaining. To a layperson it’s not that clear.

No, not one bit. That press release was terrible. Only meaningful to people who know exactly what cat bonds are (pandemic bonds are a subset of cat or CAT bonds, either way short for catastrophe). I'm a lawyer specializing in a closely related field, that's why I know about them.

[teufelhund1918]

So the entity that makes out in the end with the money is the World Bank. Correct? Timing is weird. But in the big scheme of things, 500 million is nothing these days when bail outs are in the trillions. It would be nice if I had me about 50 million of dat in my pocket though...

[SomeOtherGuy]

I wonder if an ‘investor’ could write off this type of investment, should the pandemic occur, as a charitable contribution or something similar?

Under US tax law it wouldn't be anything charitable, but it would most likely be a capital loss, which offsets your taxable capital gains.

There is nothing at all nefarious about cat bonds, but outside of risk management and certain corners of finance, no one knows about them.

[Life's a Hillary]

Speaking of risk management, I bet we will see a booming industry for pandemic insurance after this.

[Whiskey_Bravo]

Speaking of risk management, I bet we will see a booming industry for pandemic insurance after this.

99% of travel insurance specifically excludes pandemics.

[rushca01]

Speaking of risk management, I bet we will see a booming industry for pandemic insurance after this.

I work in business risk management/insurance and like we had the TRIA act pass in 2003 after 9/11 we will likely see legislation call “PRIA” Pandemic Risk Insurance Act to cover all the business interruption claims. 99.99% of insurance policies only pay business interruption claims due to a covered physical damage loss (fire, tornado etc..) and have specific exclusions for communicable diseases, so a double whammy for COVID 19. Politicians say insurance companies should pay anyways (mind you early estimates put the losses at 350,000,000,000) and the insurance market can’t bear those claims plus pay all the other claims that will still occur...hence the reason why congress may pass something similar to TRIA (Terrorism Risk Insurance Act). Originally the insurance claims post 9/11 were denied because Bush call it an act of war...war is excluded on insurance policies so he called it an act of terror, no exclusion at the time for terror so the policies paid. Post 9/11 congress passed TRIA which is in short says the Government acts as a reinsurer if we have another terror event like 9/11, every commercial insurance policy sold has the option to waive or purchase TRIA.

Issue you have is ALL insurance policies exclude coverage for the likes of war/nuclear fall out etc.. So if similar things like this occur in the future and are excluded by insurance are politicians going demand they pay anyways...

[FromMyColdDeadHand]

I'd think that one comes under public endangerment? While I see how that's an issue of that would raise issues of Const. Rights, I'm thinking this one comes under "you can't yell fire in a movie theater" either. When you're endangering others by blatantly ignoring basic best practices to prevent others from getting sick, that's not how it works.

Yep. When someone is building in church, do they get to ignore building codes because otherwise it would be a first amendment issue? Nope. Can you start a religion where you get to kill strangers? I guess only if it’s during a pandemic.