Complex triggering mechanism of ‘Ebola bonds’ slows ability to stem outbreak

Democratic Republic of Congo and World Health Organisation officials wear protective suits as they participate in a training against Ebola in North Kivu, DRC, on August 11 2018. Picture: REUTERS/SAMUEL MAMBO

“It was a lot of hype,” said Olga Jonas, a senior fellow at the Harvard Global Health Institute in Massachusetts, US, who was previously the World Bank’s economist co-ordinating avian and pandemic influenza. “They wanted to announce a new initiative that would impress the world.” The issue was a bondholder’s dream: with US treasury yields near record lows, it offers a return found only in shaky, junk-rated bonds, sold from the best credit in the world and with a payout formula that was hard to trigger. The transaction was 200% oversubscribed, according to the World Bank.While other funds from the facility flow to relief organisations relatively easily — after as few as 30 Ebola deaths in one country — triggering its $425m insurance fund is more complicated.

Ideally, more money would be available for countries to develop their own public health capacity, rather than depending on donors to help quell crises, said David Heymann, chair of the WHO’s strategic technical advisory group on infectious hazards.Still, as more countries focus on domestic issues and the number of governments willing to respond urgently to outbreaks abroad wanes, the need for sources of emergency funds is increasing, said Jeremy Farrar, director of the Wellcome Trust in London.

Critics say the bond’s complicated triggering mechanism slows its ability to stem infectious contagions. The 386-page bond prospectus lays out scenarios for global or regional spread that would trigger the insurance portion to be distributed to poor countries where cases are accumulating.

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