(Bloomberg) -- Amtrak obtained $275 million of natural-disasterprotection from fixed-income investors in the first catastrophebond for the U.S. long-distance passenger railway.
Marsh & McLennan Cos.’ GC Securities joined GoldmanSachs Group Inc. as bookrunners and initial purchasers of the debt,Amtrak said Wednesday in a statement. The bonds will help protectAmtrak if a catastrophe damages infrastructure in the corridor fromBoston to Washington.
Insurers and reinsurers typically sell catastrophe bonds toinvestors to help cover extreme hazards, and buyers of thesecurities get above-market interest rates for taking the risk thatthey could lose principal in the event of a qualifying disaster.Amtrak’s coverage would protect against storms similar to Sandy in2012, when sea water flooded New York tunnels, causing more than $1billion in damage, according to the statement.
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