What is this Pandemic Bond?

Almost three weeks ago, before the lock-down, I took my son to the dentist. My dentist, who turns out is a bit of a conspiracy theorist, informed me that this whole Coronavirus business was linked to a Pandemic Bond that investors stood to make millions from. He proceeded to send me some information about the matter which I read, and then, did my own research on, only to discover that it’s not nearly as sinister as he had portrayed.  Yesterday it came up again in conversation with a friend, so I thought it might be worth mentioning here. The Pandemic Bond is a financial instrument issued by the World Bank in 2017 (full disclosure my father worked for the World Bank for about 30 years) in the wake of an Ebola outbreak “to channel surge funding to developing countries facing the risk of a pandemic” according to a World Bank press release.  Asset managers bought the notes and received regular interest in exchange for the risk of losing the money if an outbreak triggers the bond. So, in fact, the investors stand to lose money, not to make money in the event of a pandemic. While the underlying intent of the bond is good and would provide funds to countries such as Pakistan, Nigeria, Cambodia, Senegal, Nepal and Afghanistan to help deal with the epidemic, the bond is being criticised for being flawed and complicated in its wording.  Countries will have to wait on this money for a long time, if they ever receive it. (For more information see this article in the Financial Times  and a piece in Euromoney here). So, sinister no, but problematic yes.  As far as conspiracies go, I don’t believe that the bond is to blame for the situation we are in. I prefer the theory that China and Russia are colluding for world domination.

 Two other random tidbits that struck me today: First, the Italian government has approved drones as a means of surveilling people’s movements. Yikes.  And second, a company in Brescia is transforming snorkeling masks into respirators. You know those creepy looking snorkeling masks that cover your whole face? Those are being made into respirators. Pretty genius if you ask me. And last but not at all least: Good news for a second day in a row!  The infections seem to be slowing.  The overall increase was only 8, 1% for a total of 63, 475 cases. A tiny light flickers at the end of the tunnel.