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Investors In Risky ‘Pandemic Bonds’ Just Got Wiped Out
Investors who, for nearly three years, collected hefty coupons on a multi-tranche pandemic bond, took a big hit on Friday when an independent arbiter officially ruled that COVID-19 met the conditions to trigger losses on the notes.
Investors in the riskier tranche will be wiped out to the tune of $95 million. The senior tranche - a $225 million note - will take a $37.5 million haircut, investors said, following a ruling by Boston-based AIR Worldwide Corporation.
The World Bank sold the bonds i
LIBOR + 11% on a 3-4 year note? If it looks too good to be true…
I don’t see a big market for the next issue.
These bonds sounds like fun little cousins of the CDS I used to negotiate back in 2005-07, collect a very nice premium unless (until) the unthinkable happens, although the housing bubble was more predictable than a pandemic, right? Anyway, at least someone in need is theoretically getting the pay out on this “investment”