February 14, 2020 / 12:02 AM / 13 days ago

UPDATE 1-Mexico to issue $425 mln in catastrophe bonds in coming weeks

MEXICO CITY, Feb 13 (Reuters) - The Mexican government will issue catastrophe bonds worth about $425 million in the coming weeks, Finance Minister Arturo Herrera said on Thursday, part of a push to safeguard the country’s finances against costly natural disasters.

Mexico is frequently hit by hurricanes and was rocked by a couple of massive earthquakes in 2017, which led to hundreds of deaths and billions of dollars in damages.

“We hope these events don’t happen, but we are prepared in case they occur,” Herrera wrote in a post on Twitter. He said the process to begin the issuance was launched on Wednesday.

Mexico received at least $150 million in payouts from a catastrophe bond after the 2017 quakes. In 2018, it had renewed with the World Bank a catastrophe bond for earthquakes through February 2020 for coverage of up to $260 million.

Herrera said the bonds would work as a “type of insurance” and would be channeled to help impacted populations in case of emergency. Money from the bonds would also help rebuild vital infrastructure, he said.

Reporting by Drazen Jorgic; Editing by David Alire Garcia and Leslie Adler

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