The World Bank’s $US320m ($498m) of pandemic bonds haven’t been triggered by the COVID-19 pandemic, after the organisation said one condition is yet to be met.

COVID-19 cases must be growing exponentially in the 144 poorest and middle income countries — some of which are too poor to afford diagnostic tests — for 12 weeks before the bonds are triggered.

The pandemic bonds were issued by the International Bank for Reconstruction and Development (IBRD) in 2017 to fund relief for the poorest countries in the world during, rather than after, a pandemic.

Critics were already furious they hadn’t paid out earlier in the COVID-19 pandemic, or indeed during the most recent Ebola outbreak or by Zika virus, saying the conditions are too stringent.

The bonds could have paid out on March 23, as that was 12 weeks after the COVID-19 contagion was classified as a pandemic by the World Health Organisation.

The bonds mature in June this year.

The conditions that have been met are: 2500 total fatalities, for the larger Class A tranche, and 250 for the riskier Class B tranche; ongoing total cases numbers of 250 or more; 12 weeks passing since the start of the outbreak; confirmed cases as a percentage of total cases exceeding 20 per cent; and the outbreak is in more than one country, each with 20 or more fatalities.


It might still pay out

Some health experts suggest the developing world is four to six weeks behind developed countries in infection rates.

This, combined with the fact the weekly infection growth rate kept climbing in developing countries during March while slowing in the rest of the world, indicates there is a chance the final condition will be met, according to market researcher DBRS Morningstar.

“The trajectory of the growth rate for the number of cases in International Development (IDA)/IBRD countries will depend on a number of factors, including broad accessibility to testing in the developing world and the effectiveness of social distancing measures,” Morningstar head of insurance Marcos Alvarez said in a note.

“Based on the recent evolution in the number of cases in IDA/IBRD countries and our calculation of the growth rate using the prescribed formula, DBRS Morningstar estimates that it is still possible that the pandemic bonds will be triggered before their maturity.”


China skewed the numbers

Although the number of cases continues to rise globally, the calculation period from December 31, 2019, to March 23, 2020 is heavily influenced by the jump in cases in China, and subsequent stabilisation by mid-February, Alvarez said.

Based on the trend in the number of coronavirus cases in the poorest 144 countries in the world, the calculated growth rate could turn positive in late May when the impact of the trajectory of Chinese cases will drop out from the rolling calculation period.

The number of cases in IDA/IBRD countries was less than 400,000 as of April 12 and only three had more than 50,000 coronavirus cases each: China, Iran and Turkey.

The number of cases in the rest of the world hovered around 1.4 million.