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Barbados issues world's first pandemic-protected bond


LONDON (Reuters) – Barbados has issued the world’s first government bond with a package that allows for a moratorium on payments in the event of another global pandemic terms, the move is expected to attract interest from dozens of other countries ravaged by the COVID-19 crisis.

In recent years, the Caribbean has become a testing ground for sovereign debt innovation. In 2015, Grenada became the first country to add a “hurricane clause” to its bonds, sparking a string of deals that mimicked natural disasters.

Barbados’ new bond – agreed with bankers on Wednesday – could leave a bigger mark, especially for those struggling with COVID-19 19 Pandemic.

bonds, will be repaid in the next 19 year, if it happens again similar to COVID-, will be the first to allow the government to suspend payments. Payments can be suspended for up to two years at a time, or twice if necessary, but cannot be cancelled outright.

Prime Minister Mia Motley believes that much of the financial turmoil can be avoided if in 2020 for many countries now in trouble.

“It will release less than a trillion dollars in developing countries,” Motley told Reuters. “Therefore, we will not face the kind of debt crisis that many countries are facing”.

Credit Suisse banker Ramzi Issa, who has led some of the key financing aspects of the bond deal involving repos, said it was “very significant”.

“It sounded like a simple concept, but it took a lot of time,” Issa said. “This is a very valuable tool for the government to leverage…and it could set a precedent for other sovereign financing”.

This clause also covers tropical storms, earthquakes and floods, but it is a pandemic factor that is unique.

“Vaccine dose”

To trigger, the World Health Organization (WHO) must officially declare a pandemic, or a “public health emergency of international concern” at In its wording, Barbados itself would have to divert a lot of resources. A major milestone for the global lending market.

“It’s like giving your debt a shot,” said the man who helped set the terms of Barbados. Sui-Jim Ho, a partner at law firm Cleary Gottlieb, said: “You put it in and it will protect you if there is another pandemic.

The bond transaction also has ecological features.

Credit guarantee provided by the Inter-American Development Bank and an organization called The Nature Conservancy (TNC) means that Barbados Can borrow cheaper, saving $40-50 million dollars compared to the old bond it replaced.

According to the terms of the deal, making it a so-called “blue bond”.

Barbados’ maritime territory is its land area 430 At times, Mottley estimates that its image of crystal-clear waters lapping palm-fringed beaches is vital to tourism, which accounts for more than 40% of the country’s GDP, approximately Provides

% of jobs.

“We very much hope that others will follow suit,” said Slav Gatchev, managing director of sustainable debt at TNC , referring to Barbados using TNC and Inter-American Development Bank as guarantors.

“We have a nice robbery pipeline where we have six opportunities, and we hope that in the next to close two or three of them within a month. ”



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