Mexico Plans Further Catastrophe Bond

Mexico is planning to issue another catastrophe bond (CAT) early next year, this time to protect against hurricane damage. In May this year, it sold $160 million worth of CAT bonds as part of a $450 million insurance package to protect itself against the future cost of damage in the event of a major quake. This was the first time Mexico had issued such paper and the first time a developing nation had tapped the financial markets in this way. The new CAT bonds will cover the hurricane-prone regions on the Yucután Penisula and those along the Pacific coast.