Mia Hamm, hammering in yet another goal for the USA women's world cup, is one reason the world is in tune with Federation Internationale de World Cup Football Association (FIFA). But for the securitization industry, the draw might be its new US$260 million catastrophe bond that covers the cancellation risk of the 2006 FIFA World Cup Germany.
It's not the first time the global soccer governing body has tried out the benefits of securitization, though FIFA's first venture was a disappointment. While in the structuring phase of the deal, FIFA's marketing partner, International Sports Media and Marketing, filed for bankruptcy. To add to its mounting problems, the group also lost the backing of its triple-A wrap provider, AXA Insurance. The securitization was completed, though without the sizable public triple-A piece that would have sold via AXA's guarantee. There is an ongoing legal embroilment associated with the timing of AXA's withdrawal from the deal.