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New York MTA’s new MetroCat Re 2017 cat bond priced below mid-point


The new $125 million MetroCat Re Ltd. (Series 2017-1) catastrophe bond from the New York Metropolitan Transportation Authority (MTA) has now been priced at a level below the middle of guidance and sources tell us the deal has not been upsized.

The second catastrophe bond to be sponsored by the New York MTA, the still $125 million MetroCat Re 2017-1 sees the transportation authority looking for an expanded capital market coverage, adding earthquake exposures for the first time, it’s previous cat bond MetroCat Re Ltd. (Series 2013-1) only provided storm surge reinsurance protection.

The parametric triggers used ensure that the coverage from the MetroCat Re bonds could be paid out quickly, to enable the MTA, through its captive insurer, to benefit from a responsive source of reinsurance protection, financed by capital market investors.

This second MetroCat Re cat bond will provide the New York MTA with a $125 million source of reinsurance protection, which will be triggered by parametric factors associated with storm surges due to named storms and also earthquake risks, both within the New York metropolitan area, across a three-year term.

The deal was launched with the $125 million of MetroCat Re 2017-1 notes being offered to ILS and cat bond investors with coupon price guidance in a range from 3.5% to 4%.

We’re now told that the notes have been priced and the MetroCat Re 2017-1 cat bond will pay investors a coupon of 3.7%, so just slightly below the mid-point of initial price guidance.

The transaction remains $125 million in size, we understand, which had always been the target. Despite investor demand being high for catastrophe bonds right now, it seems the MTA has not elected to take advantage of low pricing in the cat bond market to upsize on the deal, rather choosing to fill a specific layer of coverage and so no increase was required, but still benefiting from the price drop on the notes of course.

This $125 million MetroCat Re Ltd. (Series 2017-1) cat bond issuance is due to complete next week. You can read all about this deal from the New York MTA and every other catastrophe bond in the Artemis Deal Directory.

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