Nepal Catastrophe Bond Project

pipeline

The proposed operation supports the design, structuring, and issuance of a three-year parametric catastrophe (CAT) bond for Nepal, strengthening the country's financial resilience by providing protection against losses from major earthquakes. With a total financing of US$20 million — covering the risk transfer premium and transaction costs — the World Bank acts as intermediary between the Government of Nepal and international capital markets, with payouts triggered by pre-defined physical parameters such as earthquake magnitude and ground shaking levels rather than actual loss assessments. Depending on the severity of the event, the bond could provide coverage of approximately US$80 million for a 1-in-20-year earthquake up to US$190 million for a 1-in-100-year event, addressing a critical gap in Nepal's existing disaster risk financing framework by providing rapid, fully collateralized liquidity for low-frequency, high-severity catastrophic earthquakes.