Zurich U.S., the American subsidiary of Anglo-Swiss multinational insurer Zurich Financial Services, announced that it has placed a political risk policy in Turkey, covering $20 million worth of private placement bonds.
The Zurich U.S. policy enabled a Turkish newspaper company to obtain a BBB- rating from Fitch IBCA and therefore issue the bonds at less cost. They are actually rated higher than Turkey’s BB- sovereign rating, and this makes them more saleable.
Zurich is developing a specialty in this field. “Zurich U.S.’ first capital markets policy for Turkey demonstrates that political risk insurance is gaining wider acceptance for the enhancement of bond issues,” said Daniel Riordan, senior VP and managing director at Zurich U.S. Political Risk.
“Issuers and investors are recognizing the value that political risk insurance can bring to bond issues in the emerging markets,” Riordan continued.
“To date, Zurich U.S. remains the only private insurer to have insured emerging market bond issues against political risks,” the announcement said. It can provide coverage up to $100 million over a 15 year period, and has so far written policies covering risks in 55 emerging market countries.
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