Government eyes fresh US$150m parametric storm bond before 2026 Atlantic season

Specialists say the authorities want catastrophe-bond protection back in place before the Atlantic hurricane season opens.

Everton McFarlane, executive director of the Insurance Association of Jamaica, said he knows the administration is working to tap international capital markets for another instrument under the World Bank’s Capital-at-Risk programme. “I am aware of the Government of Jamaica's efforts to secure new financing from international capital markets for another catastrophe bond, under the World Bank's Capital-at-Risk programme,” he said. “The amount sought is US$150 million in parametric cover for named storms and hurricanes, beginning in May 2026.”

He added that last year’s issue behaved as intended, releasing funds quickly according to how strong the cyclone was.

“While the amount would represent only a fraction of the total cost of direct and indirect economic damage and losses, the liquidity provided was crucial to provide resources for early recovery efforts and to cushion the short-term fiscal impact of the event,” he said. “The longer-term recovery imperatives can then be programmed in a deliberate way over subsequent fiscal years without disrupting the underlying path to fiscal sustainability.”

On 30 April, London-based cat-bond research house Artemis wrote that Jamaica wants roughly US$150 million via the World Bank’s International Bank for Reconstruction and Development, with Swiss Re assembling the programme and risk running across four hurricane seasons until May 2030. Artemis, citing people close to the plan, also put indicative pricing at about 6.5 to 7.25 per cent a year.

The Ministry of Finance confirmed receipt of questions from the Financial Gleaner but had not answered them at press time. Penny Bowen, a World Bank spokesperson on Caribbean matters, said she had “nothing to add” on the reported placement, while adding that “the Government of Jamaica is pursuing the inclusion of Climate Resilient debt clauses into eligible projects”.

Analysts say a fresh placement would backfill capacity used up when Jamaica’s 2025 bond paid its entire US$150 million principal after Hurricane Melissa, described as the most powerful system on record for the island. Planning Institute of Jamaica Director General Dr Wayne Henry has said Melissa’s damage, losses and linked costs total US$12.23 billion, equal to 56.7 per cent of 2024 gross domestic product and well above four times the monetary hit from Hurricane Gilbert in 1988.

Artemis said payouts on the mooted structure would move along a straight-line scale from 30 per cent of face value up to the full 100 per cent for the worst cases, with activation tied to central pressure and storm track inside parametric boxes over Jamaica and nearby Caribbean waters. The outlet put the modelled trigger chance at 3.86 per cent, versus 2.34 per cent on the 2024 deal, which it linked to investors repricing Jamaica’s wind risk after Melissa.

The bond is part of a wider US$662 million liquidity package activated after the storm. That bundle includes US$91 million from the Caribbean Catastrophe Risk Insurance Facility, US$300 million from an Inter-American Development Bank contingent credit line, US$37 million from the state’s own disaster reserves, and a Cat DDO first accessed at US$42 million that can expand to US$84 million.

Finance Minister Fayval Williams has cited post-Melissa rating moves as proof the toolkit worked. “Having these buffers against natural disasters is an important underpinning when international rating agencies assess Jamaica's creditworthiness,” she told lawmakers in her opening speech on the 2026-27 Budget Debate. Moody's lifted the sovereign to Ba3 from B1 after the event—an uncommon upgrade right after a large shock—while Standard & Poor's and Fitch each kept Jamaica at BB with stable outlooks.