The World Bank has priced a new catastrophe bond designed to help Jamaica cope with the threat of hurricanes.
The $200 million bond was oversubscribed by investors, the World Bank said in a statement. The deal comes less than a year after a $150 million Jamaica catastrophe bond, also arranged by the World Bank, paid out in full following the devastation wrought by Hurricane Melissa.
Read More: Jamaica Cat Bond Headed for Full Payout, World Bank Says
Cat bonds are designed as the ultimate backstop to help provide funds to pay for only the most extreme weather events. The Atlantic hurricane season officially starts June 1 and runs through November. This year, there’s a growing likelihood that El Niño weather patterns may reduce the number of storms in the Atlantic basin, affecting how they track and where they make landfall.
For cat bond investors, “current signals point to lower activity and losses in the Gulf, but relatively higher risk in the South- and Northeast, especially for stronger events,” Schroders said in a recent note. “This creates scope for portfolio repositioning ahead of the season and for tactical trading as conditions evolve.”
Fayval Williams, Jamaica’s minister of finance and the public service, said that “having disaster risk financing in place is a key pillar of our resilience building framework.”
After issuing the bond, the World Bank will enter into a risk transfer agreement with the government of Jamaica, which then pays a premium for the coverage, based on the terms achieved in the capital markets.
“The catastrophe bond is an important piece ensuring capital market access for Jamaica,” Williams said.
Photograph: Damage following Hurricane Melissa, in Jamaica in 2025. Photo credit: Ricardo Makyn/AFP/Getty Images
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