World Bank Launches First Ever Pandemic Bonds to support PEF
The World Bank has scrapped plans to issue a second round of pandemic bonds after it was heavily criticized for delaying the process of helping disadvantaged countries, the Financial Times reported on Monday..
In April, as the coronavirus began wreaking havoc on economies around the world, especially in developing countries, the World Bank said it would pay through «pandemic bonds» about $ 133 million most affected countries.
But critics said that the amount was too small, and It is too late.
Bonds offered to investors very attractive profitability, but in exchange for accepting the risk of losing a certain amount or even all their investments.
Pandemic bonds are a kind of debt tied to catastrophic events, designed to attract money from issuers in the event of natural disasters..
In a $ 320 million deal, pandemic bonds were first launched in 2017 in response to the Ebola outbreak in North Africa.
Around the beginning of 2019, the World Bank announced that it would change its bond structure before its last product was sold in May 2020. However, the scheduled recurrence «pandemic emergency funding mechanism» (PEF) has been postponed.
«PEF 2.0 is not planned», – the newspaper writes with reference to the press secretary.
Associate Professor in the Department of Public Health Policy at the London School of Economics Names World Bank Pandemic Bonds «terrible scheme» and said that the concept of financing pandemics needs to be revised.
«We need to somehow interact with private money, because public money is not enough or it is not fast enough», – said Clare Wenham, professor of public health.
These specialty bonds were intended to channel «growing funding» to developing countries that suffer from infectious diseases.
Initially PEF provided more than $ 500 million in financing for emerging markets through a combination of bonds and derivatives at real-time prices.
In the beginning, these bonds were very well received by investors, and quantity of those wishing to subscribe to them exceeded 200%, which indicates a high level of trust in this instrument.