Catastrophe bonds, debt instruments that pay out when a natural disaster befalls a country, are intended to spread the pain. Some places face a concentrated risk from earthquakes, floods or hurricanes—the sort that would normally register as just another headline from a far-flung land to many investors. Sharing the cost between these places and such investors, for a price, can benefit both. That looks likely to be the case for Jamaica, where Hurricane Melissa, the worst storm ever to hit the Caribbean island, made landfall on October 28th. To help with relief efforts, the country will get a $150m payout from a bond issued in 2024.
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