'Yolanda-type' Typhoon Odette triggers ₱2.69-B catastrophe bond payout — DOF

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Metro Manila (CNN Philippines, January 25) — The Philippines is set to acquire $52.5 million (about ₱2.69 billion) from its sole catastrophe-linked (CAT) bond given the impact of Typhoon Odette (international name: Rai), the Department of Finance (DOF) announced on Tuesday.

The agency said the Bureau of the Treasury requested an event calculation following the typhoon's onslaught, which hit the "partial trigger" for the bond.

"The level triggered was for a Yolanda-type event or a 1-in-19 years severity typhoon hitting the Philippines," the DOF added, referring to the 2013 super typhoon that left over 6,000 dead and tens of thousands injured, and caused damage worth over ₱90 billion.

Launched in November 2019, the bond provides up to $150 million of protection for typhoons up to November this year, along with $75 million for earthquakes. It allows an added layer of financial protection against the disasters - the more severe but less frequent ones.

With the payout, the Philippines has $97.5 million of coverage left.

"This financial instrument is just among the several innovative strategies that the government is undertaking to improve our resilience against natural calamities," Finance Secretary Carlos Dominguez said.

"We will continue to tap the international financial markets and create innovative structures and projects to achieve our goal of being a world leader in the fight against the climate crisis," he added.

The DOF said a second calculation will be done for the bond upon the availability of precipitation data in the months ahead.

The CAT bond was issued through the World Bank's Capital-at-Risk Notes facility, with the Washington-based lender serving as issuer. It is the first bond of its kind for the Philippines and for Asia.

Listed in the Singapore Exchange, the bond is also the first listed in any Asian stock exchange.

Odette left damage worth billions of pesos in the Visayas, Mindanao, and parts of Luzon last month after making nine destructive landfalls in the country.

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