Potential for Catastrophe Bond Issuance to help Latin American Sovereigns Manage Climate Risk
Moody's Ratings is a leading provider of credit ratings, research, and risk analysis. Natural disasters pose a substantial threat to economic stability and fiscal health, especially in emerging markets and developing economies. These regions often face heightened vulnerability due to their weaker economic resilience and limited access to hedging and risk management tools. As climate change accelerates, the frequency and intensity of such disasters are increasing, exacerbating the challenges these countries must navigate. This situation underscores the urgent need for robust strategies and international support to enhance their capacity to withstand and recover from these disruptive events.
This project seeks to address the following questions:
- Among the sovereign entities rated by Moody's, how often have natural disasters occurred over the past 20 years, and how significant has the resulting damage been?
- Has there been an observable increase in the frequency and severity of these natural disasters during this period?
- What financial and hedging instruments are available to assist countries in managing the risks associated with these events?
- How could countries use some of these instruments to manage the risks?