Barbados Issues World's First Pandemic-Protected Bond

  • Barbados has issued the world's first government bond with a clause allowing payments to be suspended in the event of another global pandemic, a move expected to attract interest from dozens of other countries ravaged by the COVID-19 crisis.
  • The country’s new bond - finalised in a deal with bankers on Wednesday - is likely to leave an even bigger imprint, especially with smaller, tourism-dependent countries that were pushed to the brink of economic collapse during the COVID-19 pandemic.
  • The bond, to be repaid over the next 15 years, will be the first to allow a government to suspend its payments if another outbreak similar to COVID-19 happens. Payments can be suspended for up to two years at a time and twice if necessary, but it cannot be cancelled altogether.
  • Most notably, credit guarantees provided by the Inter-American Development Bank and an organisation called The Nature Conservancy (TNC) means Barbados can borrow more cheaply, saving itself between $40-$50 million compared to its replaced old bond.
  • That money will be used specifically for protecting and rehabilitating the surrounding Caribbean Sea, according to the terms of the deal, making it what is known as a 'blue bond'.

(Source: Reuters)