Hedge Fund Fermat Invests in First-of-a-Kind Catastrophe Bonds

Fermat Capital Management has invested in the Asian Development Bank’s first-ever catastrophe bonds, designed to shield Kyrgyzstan and Tajikistan against specific types of natural disasters.

The two sovereign bonds — each $80 million in size and with a three-year tenor — will pay out to impacted communities if predefined levels of precipitation are breached, or if earthquakes reach particular magnitudes, regardless of actual losses.