The $100 million Pelican IV Re Ltd. (Series 2018-1) catastrophe bond, the latest issuance from residual market insurer Louisiana Citizens Property Insurance Corporation, has now been priced with the coupon settling at the low-end of initial guidance.
The Pelican IV Re 2018 cat bond is the first from Louisiana Citizens that seeks multi-peril collateralized reinsurance for the states property insurer of last resort, its fifth cat bond in total and the first to expand the range of perils on offer to investors.
The transaction sees special purpose insurer (SPI) Pelican IV Re Ltd. issuing a single $100 million tranche of Series 2018-1 Class A notes, to provide sponsor Louisiana Citizens with reinsurance cover for losses from Louisiana named storms (so tropical storms and hurricanes) and Louisiana severe thunderstorms, across a three-year term on a per-occurrence basis and using an indemnity trigger.
The deal hasn’t changed in size since its launch, with the notes covering just a $100 million layer of the sponsors reinsurance tower, but the pricing has moved, continuing the general downward trend seen across almost all cat bonds so far this year.
At lauch, the $100 million tranche of Series 2018-1 Class A notes, with an initial expected loss of 0.97%, were offered to cat bond investors with coupon price guidance of 2.25% to 2.75%.
The guidance range followed the trend of almost every catastrophe bond launched this year, as the Pelican Re IV 2018 notes had their coupon guidance slashed to below the initial range, at 2% to 2.25%.
But the notes have now been priced at the upper end of the reduced range, at 2.25%, so the bottom of initial guidance, as ILS investors declined to accept the lower coupon for the insurers first multi-peril transaction.
The pricing is still keen though, reflecting investor appetite and the continuing the trend of extremely efficient execution for cat bond offerings brought to market this year.