Japanese primary insurance group Tokio Marine & Nichido Fire Insurance Co. Ltd. will be delighted with its latest visit to the catastrophe bond market after sources said that its Kizuna Re II Ltd. (Series 2015-1) deal is set to increase in size to JPY 35 billion, approximately $290m.
The cat bond launched just over a week ago with an offering size of JPY 25 billion, which at the exchange rate at the time was close to $205m. Sources said today that the latest deal communication shows that the transaction is set to upsize by 40% thanks to strong investor demand, and is set to raise around $290m to fund the Japanese earthquake reinsurance protection that Tokio Marine is looking for.
The price guidance has not moved, which is no surprise given the Kizuna Re II 2015-1 cat bond was not marketed with a range. It stays at 2% above the collateral investment yield.
As we’ve written before, that’s a low coupon but this is an extremely remote risk deal, with the expected loss just 0.018%. It’s such a remote risk that the transaction achieved an investment grade rating from Standard & Poor’s, the first cat bond to do so since 2008.
The Kizuna Re II Ltd. (Series 2015-1) catastrophe bond is scheduled to complete later this month. We’ll keep you updated and you can read all about the transaction in our Deal Directory and in the two articles linked below.
– Tokio Marine sponsors $205m Kizuna Re II 2015 Japan quake cat bond.
– Kizuna Re II 2015-1 first investment grade cat bond since 2008: S&P.
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