Secondary cat bond trading rebounds in H1 2026 as buyers outpace sellers: Swiss Re

The secondary market for catastrophe bonds remained bid-heavy during the opening half of 2026, as an influx of market participants looked to buy bonds rather than sell out of their existing positions, which caused for secondary market activity to see a meaningful increase during the period following a relatively subdued 2025, according to Swiss Re Capital Markets.

In its latest insurance-linked securities (ILS) insights report, Swiss Re Capital Markets notes that TRACE activity totalled 806 through June 2026, heavily exceeding H1 2025’s activity by roughly 37.5%.

As the firm explains, this increase has been highly evident since March, with TRACE volumes rising to 148 trades during the month, and then to 198 trades in May.

“According to TRACE data, May 2026 was the most active month in the secondary market since March 2020. In mid May, the catastrophe bond market experienced a particularly active and broad week of secondary market trading. Albeit generally in small volumes, 129 different bonds—around one third of the number of outstanding catastrophe bond classes—changed hands in the week of May 18 as reported on TRACE,” the report reads.

Swiss Re Capital Markets indicated that this wave of activity highlights the increased liquidity within a maturing secondary cat bond market.

Also in the report, the firm observed trends being seen within seasonally adjusted secondary spreads for select baskets of catastrophe bonds.

Data from the report shows that US Wind spreads continued the tightening trend that was observed heavily throughout much of 2025, with continued investor demand and limited loss activity impacting outstanding bonds.

At the same time, US Earthquake spreads increased over the first half of 2026, while Industry Loss spreads remained relatively flat.

“Overall, spread movements across the three groups of catastrophe bonds have become more moderate relative to the larger movements observed post-Hurricane Ian,” Swiss Re Capital Markets said.

Further into the report, Swiss Re Capital Markets provided some insight into how the cat bond market performed during the opening half of 2026.

“Despite continued uncertainty across global financial markets during the first half of the year, including ongoing geopolitical tensions, evolving trade policy and heightened volatility across traditional asset classes, the catastrophe bond market has once again demonstrated its low correlation to broader financial markets and other alternative asset classes,” the report reads.

Given this, Swiss Re’s Global Catastrophe Bond Index (SRGLTRR) managed to return 4.12% over the first half of 2026.

“Weighted average spreads have continued tightening over the first half of 2026, reflecting continued strong investor demand and a well-capitalized market. At the same time, elevated money market rates continue to provide meaningful support to all-in yields, which remain attractive relative to the lower rates observed in previous years,” the firm concludes.

For a detailed look at Q2 and H1 2026 catastrophe bond market activity download our latest report here.