The World Bank issued “pandemic bonds” in 2017 with an interest rate of 12% that were set to mature in July 2020, with one catch: If “coronavirus“ became a pandemic – and in 2017 they called Coronavirus by name – then investors would lose all their money.
What will not surprise many is that TWP leans on Bill Gates’s assessments of the state of affairs within in the US’s healthcare system but that of of the entire globe…
Critics say the “insanely complicated” terms of the high-interest bonds are heavily skewed towards investors, while for the victims any payouts may come too late, if at all. One economist described the bonds, payouts from which depend on how deadly the outbreak is, as “obscene”.
Investors in World Bank’s ‘pandemic bonds’ face big losses due to the coronavirus outbreak
Those bonds, issued by the World Bank’s International Bank for Reconstruction and Development in 2017, were designed to pay out funds to countries which need help to contain a pandemic.
- The World Bank bonds offer investors high interest payments in return for taking on the risk of losing a certain amount or all of their money if pandemics occur. That includes the current coronavirus pandemic.
- But prices of those bonds have plunged, as investors flee with the number of cases surging.
- According to ratings agency DBRS Morningstar, investors who hold the riskier of the two bonds could be losing their entire principal amount soon, with the firm saying that the price should have dropped more than 80%.
More @ Source: Coronavirus: World Bank ‘pandemic bond’ investors face big losses
“The time has come to cash out our pandemic bonds”
Mr. Kim said in June 2017, at the time of the launch, “We are moving away from the cycle of panic and neglect that has characterized so much of our approach to pandemics.” It was a noble goal, but the cycle remains. The new coronavirus disease, covid-19, is spreading around the world, people are panicking, and many poor countries with weak health systems stand to be hit exceedingly hard. The coronavirus transmits between humans and has a high mortality rate among the elderly, according to tentative data from China, where the outbreak began. Low- and middle-income countries are precisely those that the World Bank bonds were designed to help out, and, as Bill Gates pointed out last week, their health-care systems are already “stretched thin.”
More @ Source: The time has come to cash out our pandemic bonds – The Washington Post
One economist described the bonds, payouts from which depend on how deadly the outbreak is, as “obscene”.
One economist described the bonds, payouts from which depend on how deadly the outbreak is, as “obscene”.
Olga Jonas, a senior fellow at Harvard Global Health Institute who was an economist at the World Bank for three decades, said: “The whole mechanism is highly unfortunate. The objectives were to help the poorest countries respond quickly to outbreaks. Infectious disease spreads exponentially and the coronavirus has a very rapid growth rate. But the bonds only get triggered when the disease has spread for a long time.”
Jonas, who has analysed the bonds’ terms, said they were “so convoluted, it is not at all clear whether they will pay out at all. It is too little, too late – and in this case, maybe never.
“What’s obscene is that the World Bank set it up this way. It waits for people to die.”
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