The World Bank, a global development cooperative owned by 189 nations, created the PEF in May 2016 during the meeting of the G7 Finance Ministers and Central Governors in Japan. Using funds from the issue of the pandemic bonds, as well as other sources, the PEF will provide needed emergency investment in response to 6 potentially pandemic viruses: new influenza pandemic virus A, severe acute respiratory syndrome (SARS), Middle East respiratory syndrome (MERS), Ebola, Marburg, and Crimean Congo, Rift Valley, and Lassa fever. The PEF will provide funding to eligible countries once an outbreak achieves predetermined metrics, based on the numbers of deaths and the speed of its spread, among other factors, using publicly available data from the World Health Organization (WHO).
The pandemic bonds and derivatives created for the PEF were developed by the World Bank Treasury in cooperation with reinsurance providers Swiss Re and Munich Re, using the AIR Pandemic Model
to “provide expert risk analysis.” Revenues from the bond sales will be augmented by a cash investment of €50 million ($56.7 million US), which will be provided by Germany in 2018.
Investors who purchase the pandemic bonds will receive regular coupon payments until their maturation date in July 2020 (at 7% or 11% interest, depending on the bond issue); should an outbreak of one of the 6 diseases covered by the PEF occur, they will not get their initial investment back.
The World Bank’s announcement of the initiative generated global coverage, with reports in the Financial Times
as well as France 24
, among dozens of other outlets. However, it appears the Guardian
was among the few to go beyond the institution’s press release in its coverage
“The recent Ebola crisis in west Africa was a tragedy that we were simply not prepared for. It was a wake-up call to the world,” the World Bank’s Kim told the newspaper. “We can’t change the speed of a hurricane or the magnitude of an earthquake, but we can change the trajectory of an outbreak. With enough money sent to the right place at the right time, we can save lives and protect economies.”
Of course, there’s no way of knowing what investors in the bonds will value more: saving lives or protecting global investments. Wanna bet?
Brian P. Dunleavy is a medical writer and editor based in New York. His work has appeared in numerous healthcare-related publications. He is the former editor of Infectious Disease Special Edition.
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