Healthcare cat bond could mitigate future crises
The bond market could be the answer to financing better preparedness for the next global pandemic.
As the world cautiously cheers news of potential vaccines against Covid 19, attention should turn towards ways in which countries can better prepare for the next pandemic.
Many of those outside Asia could hardly have been worse prepared, the consequences of which can be seen as the economic and healthcare tolls continue to rise in, for example, the US and UK.
What is to be done?
Considering the yawning budgetary deficits that all nations now face, one of the first things should be to figure out how to pay for those preparations in the first place.
The capital markets have already stepped up impressively in the funding of vaccine distribution for the International Finance Facility for Immunisation (IFFI), and they should be called on again when it comes to funding better defences against the next pandemic.
The IFFI tapped the market at the end of October with its first dollar-denominated syndication since 2017 in order to disburse funds to the vaccine alliance Gavi to help to support the development and procurement of Covid-19 vaccines.
The $500 million three-year deal attracted over $1 billion in indications of interest. This kind of appetite could be tapped to finance better preparedness too, through funding stockpiling of medical equipment and PPE, and coordinating any emergency response.