Mystic Re III catastrophe bond almost doubles in size to $275m

by Artemis on February 23, 2012

The Mystic Re III Ltd. catastrophe bond, which is the latest cat bond to be sponsored by U.S. insurer Liberty Mutual, is said to have almost doubled in size during its marketing according to sources. We’re told that Mystic Re III, which began marketing as a $150m deal, has now jumped to a $275m cat bond. The deal will provide Liberty Mutual with a source of indemnity based cover for U.S. hurricanes and earthquakes on a per-occurrence basis.

Originally the two tranches of Liberty Mutual III were both sized at $75m however our sources have told us that the upper layer Class A which attach at $2.1 billion has grown to $100m in size, while the lower layer and more risky Class B notes tranche which attach at $1.3 billion has more than doubled to $175m. That clearly shows the appetite amongst investors for these perils and also the appetite for the more risky tranche indicates a hunt for the higher coupon return that tranche will offer investors.

The Class A notes are said to be due to pay a coupon of 9% above Treasury money market funds and the Class B tranche 12%.

We’ll update you further when the transaction completes in the coming days.

Read more details about Mystic Re III Ltd.


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