The first catastrophe bond of the third-quarter, Queen Street VI Re Ltd. a U.S. hurricane and European windstorm cat bond from Munich Re, has now completed successfully, been rated by Standard & Poor’s and listed on the Bermuda Stock Exchange. Munich Re’s sixth Queen Street cat bond deal was slightly unusual as it is rare to see U.S. hurricane risk issued in a cat bond during the season, but it has successfully issued the $100m single tranche of notes that Munich Re was seeking.
Queen Street VI Re Ltd. is a Bermuda domiciled special purpose insurer formed for the dual purpose of entering into a retrocession reinsurance contract with Munich Re and issuing cat bond notes on their behalf. The $100m of notes issued by Queen Street VI Re are designed to provide Munich Re with a three-year source of reinsurance protection against U.S. hurricanes and European windstorms on an industry loss basis.
As we wrote a week ago the notes priced below the lower end of the expected range. When the deal began marketing the notes were expected to pay a coupon to investors in the range of 10.75% and 11.5% but our sources confirmed that the deal actually priced at 10.35%. The fact the deal priced lower than guidance suggests that demand was high for this transaction and investors were willing to take a lower coupon to access the notes.
Standard & Poor’s gave the $100m of notes a ‘B’ rating. The notes issued by Queen Street VI Re Ltd. have been approved for listing on the Bermuda Stock Exchange. Prime Management Limited acted as listing sponsor.