The Asian Development Bank (ADB) issued its first Disaster Relief Bond (DRB) offerings, also known as catastrophe bonds, as part of its regional Risk-Layered Disaster Relief Finance Program which aims to reduce the financial impact of natural hazards and climate-related shocks. The bonds are designed to protect against severe disasters and provide quick liquidity to the Kyrgyz Republic and Tajikistan following a qualifying event.
“When a major earthquake or flood strikes, it can set back development by years,” said ADB Vice-President for Finance and Risk Management Roberta Casali. “With this inaugural sovereign catastrophe bond, our developing member countries in Central Asia gain rapid, committed financing when disaster hits, so they can build back faster. This bond will pave the way for future issuances, and over time deepen investor engagement in this dynamic region.”
The DRBs will provide rapid and targeted financial support following severe earthquake or flood events, based on predefined and independently verified parametric triggers. After a qualifying disaster in either country, proceeds will be disbursed through national social protection systems to support affected populations, particularly the most vulnerable.
The $80 million 3-year DRB for the Kyrgyz Republic has a coupon (per annum) comprised of compounded Secured Overnight Financing Rate (SOFR) plus a funding margin of 4 basis points plus a risk margin of 600 basis points. It was priced at par with a maturity date of May 30, 2029.
The $80 million 3-year DRB for Tajikistan has a coupon (per annum) comprised of compounded SOFR plus a funding margin of 4 basis points plus a risk margin of 600 basis points. It was priced at par with a maturity date of 30 May 2029.
Aon Securities LLC acted as dealer, initial purchaser, and sole bookrunner with Munich Re acting as sole structuring agent.
Both tranches achieved wide primary market distribution. On the DRB for Kyrgyz Republic, 64% of the bonds were placed in Europe; and 36% in the Americas. By investor type, 37% went to specialized insurance-linked securities funds, 32% to insurance/reinsurance companies, and 31% to fund managers. On the DRB for Tajikistan, 60% of the bonds were placed in Europe; and 40% in the Americas. By investor type, 36% went to specialized insurance-linked securities funds, 33% to insurance/reinsurance companies, and 31% to fund managers.
The notes will be listed on the Singapore Exchange.
The project is supported by the Asian Development Fund, the Asia Pacific Climate Financing Fund, and the Monetary Authority of Singapore’s Insurance-Linked Securities Grant Scheme which is funded by the Financial Sector Development Fund.
To prepare for the transactions, ADB supported the Kyrgyz Republic and Tajikistan through a dedicated regional technical assistance under the Central Asia Regional Economic Cooperation Program. The analytical and advisory work was conducted by an international consortium led by WTW.
“We are delighted by the strong response from the global investor community, whose support has further enabled the transfer of sovereign disaster risk from the public to private sector,” said Managing Director, Asia Pacific at Aon Securities Jordan Brown.
“Munich Re is honored to have supported ADB’s inaugural Disaster Relief Bonds. We congratulate ADB on these innovative, tailor-made, and successful capital market risk transfers, which introduce perils from a new region to the catastrophe bond market, thereby pushing the boundaries of insurability,” said Global Head of Capital Partners at Munich Re Leonie Schubert. “This risk-layered approach provides each country with financing options at different event severities, whilst the link to the social protection system is designed to ensure DRB payouts reach those who are most affected,” said Senior Director at WTW Christopher Au.
ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, the Asian Development Bank is owned by 69 members—50 from the region.
