S&P still unsure on outcome for Topiary Capital

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Standard & Poor’s is still unsure on the final outcome for the Japanese earthquake threatened catastrophe bond, Topiary Capital Ltd. The deal issued by Platinum Underwriters in 2008 is currently on CreditWatch negative, and that’s where S&P say it will stay until they receive the calculation report from Risk Management Solutions (expected on the 25th April).

Topiary Capital is only at risk of activation, not loss, from the Japanese earthquake on the 11th March. If it is activated it will then be at risk of loss should any subsequent events qualify to trigger it.

S&P said in an update published yesterday, that they have determined that if Topiary Capital is deemed an activation event they will downgrade it to ‘CCC+’ and remove it from CreditWatch. They had previously indicated that it could be lowered to ‘CCC’. Alternately, if it’s not an activation event then it will stay at its original rating of ‘BB+’. S&P expect to get the final information required to identify if Topiary Capital has been activated on the 25th April.

As we wrote the other day, Platinum themselves believe that the earthquake will qualify as an activation event under the terms of the catastrophe bond.

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