Below is a copy of a press release received while I was away regarding the appointment of the Bank of New York Mellon as trustee and paying agent for the Liberty Mutual Mystic Re II catastrophe bond deal.
NEW YORK, April 13 – The Bank of New York Mellon (NYSE: BK) has been appointed trustee, paying agent, transfer agent and custodian for Mystic Re II Ltd.’s $225 million catastrophe bond issue. The three-year risk period bonds, issued by Cayman Islands-based special purpose vehicle Mystic Re II Ltd., covers Liberty Mutual Insurance Company and its affiliates for certain potential losses caused by earthquakes and hurricanes in the United States.
In its role, The Bank of New York Mellon will provide a variety of services for the debt issue, including processing principal and interest payments, acting as custodian for deposited assets and maintaining noteholder records. The Bank is the leading corporate trust provider in the catastrophe bond market with an 82% market share at the end of 2008.
Mystic Re II Ltd.’s bond issue addresses investor desire for transparency and safety around the management of the collateral associated with the deal. In particular, The Bank of New York Mellon will safekeep any cash collateral posted as security for performance under the transaction’s total return swap.
“This transaction by Mystic Re II Ltd. highlights the innovative and transparent actions being taken by issuers in the catastrophe bond market to address investor concerns,” said Elizabeth DaSilva, managing director and head of the Global Americas region for the Global Corporate Trust business. “With the cat-bond market expected to rebound in 2009, we will continue to work closely with underwriters and insurance clients to service the emerging deal structures that are satisfying market demand.”