The Asian Development Bank has launched its first Disaster Relief Bond offerings, marking its entry into the catastrophe bond market as it seeks to help vulnerable member countries secure faster access to emergency funding after major natural disasters.
The inaugural issuance forms part of ADB’s regional Risk-Layered Disaster Relief Finance Program, which is designed to lessen the financial strain caused by natural hazards and climate-related shocks. The first two bonds will provide protection for the Kyrgyz Republic and Tajikistan, giving both countries access to rapid liquidity after qualifying earthquake or flood events.
“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.”
Each of the two tranches totals $80 million and carries a three-year term to maturity on May 30, 2029. Both were priced at par and carry an annual coupon made up of compounded SOFR plus a 4 basis point funding margin and a 600 basis point risk margin.
ADB said the bonds are structured with predefined and independently verified parametric triggers, allowing funds to be released quickly after a qualifying event. Once triggered, the proceeds will be channelled through national social protection systems to support affected communities, with a particular focus on vulnerable populations.
The transaction also drew broad support from investors. For the Kyrgyz Republic tranche, 64% of the bonds were placed in Europe and 36% in the Americas. By investor type, 37% went to specialist insurance-linked securities funds, 32% to insurance and reinsurance companies, and 31% to fund managers. The Tajikistan tranche saw 60% placed in Europe and 40% in the Americas, with 36% allocated to specialist ILS funds, 33% to insurance and reinsurance firms, and 31% to fund managers.
The notes will be listed on the Singapore Exchange. Aon Securities acted as dealer, initial purchaser and sole bookrunner, while Munich Re served as sole structuring agent. The project also received support from the Asian Development Fund, the Asia Pacific Climate Financing Fund and the Monetary Authority of Singapore’s Insurance-Linked Securities Grant Scheme.
Aon Securities managing director for Asia Pacific Jordan Brown said the strong investor response had helped transfer sovereign disaster risk from the public to the private sector. Munich Re’s global head of capital partners Leonie Schubert said the deal introduced risks from a new region into the catastrophe bond market and pushed “the boundaries of insurability”.
The issuance represents a notable step in using capital markets to strengthen disaster resilience in Central Asia, while also broadening the investor base for sovereign catastrophe risk.
