About

Number of years practice: 34 Principal practice areas: Capital markets, finance Bar admissions: District of Columbia, New York Languages spoken: English

In Mexico, nearly one third of the population is located in areas that are exposed to hurricanes, storms, floods, earthquakes, and volcanic eruptions. In 2017, the International Bank for Reconstruction and Development (IBRD, part of the World Bank Group) called on Sullivan & Cromwell partner Dennis Sullivan to advise in connection with its issuance of catastrophe bonds designed to provide Mexico with protection against financial losses from certain earthquakes and named storms. The catastrophe bonds were issued under IBRD’s capital-at-risk notes program, which was created in 2014 to help transfer risks related to natural disasters or pandemics from developing countries to the capital markets, in an aggregate nominal amount of $360m across three classes (Class A, Class B and Class C). Following the occurrence of an earthquake, Atlantic or Pacific named storm meeting certain parametric triggers, the principal amount of the relevant class of catastrophe bonds would be reduced, and a Mexican federal administrative trust created to aid victims of natural catastrophes (FONDEN) would receive emergency funding pursuant to certain risk transfer agreements (as of the date of issuance, all three classes were in the top 10 best priced tranches for 2017). The issuance of the catastrophe bonds was a prescient decision. One month later, Mexico was struck by two titanic earthquakes – the Chiapas earthquake on September 7, and the Central Mexico earthquake on September 19. In the wake of the first earthquake, the principal amount of the Class A bonds, initially $150m, was reduced to zero, and a corresponding amount was transferred to FONDEN. Through this representation, Sullivan helped launch an innovative means of insuring developing countries against natural disasters. Shortly after, in February 2018, Sullivan and his team again helped the IBRD issue four classes of catastrophe bonds, with an aggregate principal amount of $1.36bn, to provide Mexico and the other Pacific Alliance countries (Chile, Colombia, and Peru) with protection against financial losses from earthquakes. This issuance is the largest sovereign risk insurance transaction to date and the second-largest issuance in the history of the catastrophe bond market. Sullivan frequently works on US-Mexico matters, offering sage guidance drawn from his years of experience as a member of Sullivan & Cromwell commodities, futures and derivatives, structured finance, commercial lending and project finance groups.