Nepal, in collaboration with the World Bank, is preparing to issue a disaster bond in the international capital market to secure emergency financial protection against earthquake damage. The two sides have signed a memorandum of understanding for a bond worth up to US$190 million. Under the proposed arrangement, Nepal would receive funds to manage earthquake-related losses if specified earthquake criteria are met. No details have been provided on when the bond will be issued or what precise criteria would trigger a payment.
Proposed earthquake financial protection
The planned bond is intended to give Nepal access to financing for earthquake-related losses. Its value could be as high as US$190 million, although the agreement described so far is an MoU to prepare the bond, not confirmation that it has already been issued. The proposed financing would be available only if the specified earthquake conditions are met.
That condition is central to how the arrangement is described: the funds are not presented as an unconditional payment. Instead, Nepal would receive the amount if an earthquake meets the criteria set for the bond. The summary of the agreement does not specify how those criteria will be measured, what threshold an earthquake would need to meet, or whether the full amount would be payable in every qualifying case.
The stated purpose is to help manage losses caused by earthquakes. The agreement therefore links the proposed financing directly to earthquake risk, rather than describing it as general-purpose funding. Details on how the money would be allocated or which costs it would cover have not been announced in the information available.
Agreement marks a preparation stage
The MoU signed with the World Bank establishes a basis for preparing the proposed bond. Nepal is looking to raise the financing through the international capital market, but the reported agreement does not say that the bond has yet been placed with investors or that funds have been received. Further details about the structure and timing remain unclear.
For now, the key terms reported are the intended purpose, the maximum size and the condition for receiving funds: the bond would support the management of earthquake-related losses, could be worth up to US$190 million, and would pay out if specified earthquake criteria are met. The MoU represents a step toward arranging that financial protection, while the final issuance and trigger conditions have not been detailed.
The proposed bond would give Nepal a dedicated source of emergency financing linked to earthquake damage if the agreed conditions are fulfilled. Until further terms are made public, the amount Nepal could ultimately receive, the criteria for payment and the expected issuance date remain unspecified.
