New York's Metropolitan Transportation Authority (MTA), the biggest transportation network in North America, is selling a $125 million “catastrophe” bond designed to cover the costs of damage from a future storm or hurricane, investors said on Monday.
The MTA, which suffered a $5 billion hit from Hurricane Sandy in October 2012, will be able to offload the risk of incurring similar storm-related losses to investors, who will receive a yield in return for agreeing to pick up future repair bills.
New York is preparing for an increase in severe weather after Sandy caused more than $30 billion of damage in the state. The city has just announced a $20 billion infrastructure plan to boost its storm defences, and the state now includes a warning about severe weather threats in its bond prospectuses.
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