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Blue Danube II catastrophe bond grows to $175m, prices at low end


German insurer Allianz’s latest catastrophe bond transaction, Blue Danube II Ltd. (Series 2013-1), has now increased in size to $175m and its pricing has been set at the low-end of an already reduced range. This deal is the German insurers eighth visit to the cat bond market since 2007, which makes the insurer among the most prolific sponsors of cat bonds, and replaces and extends the cover from its soon to mature Blue Fin 3 cat bond.

The transaction is designed to collateralize risk transfer contracts through the sale of the single tranche of cat bond notes and will provide sponsor Allianz Argos 14 GmbH with a multi-year source of fully collateralized reinsurance protection on a per-occurrence basis. The deal covers hurricanes or named storms in the U.S., the majority of the Caribbean and Central America including Mexico, as well as earthquake risks in the U.S. and all provinces of Canada.

The deal began as a single tranche of Series 2013-1 notes sized at $150m, but when the transaction priced it had increased in size to secure Allianz $175m of cover.

The pricing on the transaction began with a coupon guidance range of 4.75% to 5.5%, but that price guidance was reduced last week to 4.25% to 4.75%. At pricing yesterday we understand that the coupon dropped to the bottom of that reduced range to finish at 4.25%. That’s a very healthy reduction of -17% on the mid-point of the original price guidance, or as much as -23% if you take the upper end of that original price range.

This transaction is due to settle later in May we understand, we’ll update you when it has completed. You can read much more about Blue Danube II Ltd. (Series 2013-1) in our catastrophe bond Deal Directory.

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