Renewed interest in non-traditional asset securitizations could spark cat bonds


Non-traditional securitized assets have been growing in popularity and receiving increasing levels of interest from investors and issuers alike. The solid performance demonstrated during the recent downturn and continuing attractive bond yields should help to keep investor interest strong in non-traditional U.S. asset securitizations through 2011 according to a report from Standard & Poor’s.

Standard & Poor’s have been looking at the trends over the last year and talking to market participants (investors, arrangers and originators) at a series of roundtable events held towards the end of 2010. The report ‘Renewed Interest In Nontraditional Assets Could Spark New Securitizations‘ available to subscribers of S&P’s RatingsDirect service, takes a look at some areas of non-traditional asset securitization in the U.S. and concludes that interest will increase in certain asset classes and decrease in others.

One of the areas likely to receive increasing attention over the coming year is catastrophe bonds and insurance-linked securities. These have been one of the best performing assets over the course of the downturn and as yields continue to be attractive investor interest is high. Issuers and arrangers in catastrophe bond transactions have been working hard to resolve issues caused by the total-return-swap collateral approach and we’ve seen a number of different collateral structures used over the past year. This hasn’t gone unnoticed by investors we’ve spoken to and some of our contacts cite that as one of the positives that puts cat bonds high up their list of attractive areas to invest in.

A positive outlook on the non-traditional asset securitization market as a whole can only be a positive for the cat bond market. If the sector receives an influx of interest from new investment sources, particularly from investors seeking new non-traditional opportunities, and the market innovates by issuing diversified transactions, then we could see a very positive year for cat bonds, even if total $ issuance isn’t much increased from last year.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.

Read previous post:
Insured losses from U.S. winter storm could hit $1.4 billion

Insured losses to residential, commercial, industrial properties and their contents and to automobiles from the U.S. winter storm which struck...