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CSFB scores first with world cup bond

Issuer: Fifa
Size: $260 million event risk bond
Arranger: CSFB
Date: September 30 2003

When - or should that be if - the 2006 World Cup kicks off in Germany, the world will be watching. The total television audience for the last tournament, staged in Japan and Korea in 2002, was a staggering 33 billion people, with around 2 billion tuning into the final at some point. The World Cup is arguably both the biggest sporting event and the biggest broadcasting event on the planet. So if it doesn't happen, it's not just the TV-viewing multitudes that are going to be disappointed.

Event risk is a big concern for world football's governing body, Fifa (Fédération Internationale de Football Association). It incurs a large chunk of the huge costs of staging a World Cup in the four-year interval between tournaments. So its two direct sources of revenue - sponsorship rights and TV rights - are largely pre-paid. If the games aren't played in full sponsors and broadcasters will want their money back.

Terrorism forces rethink

Until September 11 2001, the insurance markets could cover even such mammoth event risk. But soon after the terrorist attacks on New York, AXA announced it was terminating its insurance coverage of the 2002 World Cup.

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