cat bond trading

The catastrophe bond market is once again demonstrating its financial liquidity, as secondary trading volumes have risen driven by certain investors looking to sell their positions at a time when volatility in the broader financial markets is extremely high due to the coronavirus pandemic.

The catastrophe bond new issuance pipeline is growing, according to sources, leading to expectations that the secondary market could face a particularly busy few months, as ILS funds and investors look to accommodate new cat bond deals and rebalance their portfolios.

Beech Hill Securities, Inc., a New York based full-service broker-dealer now has a catastrophe bond trading capability.

Catastrophe bond funds have faced pressure on positions in May thanks largely to increasing cat bond spreads, as the secondary market responded to primary issuance premiums, as well as high levels of liquidity that can impact values of positions.

Catastrophe bond spreads widened in late 2018 as certain insurance-linked securities (ILS) funds required liquidity, although this trend has somewhat reversed during the start of 2019, according to Swiss Re Capital Markets, a division of global reinsurer Swiss Re.

Speaking at the recent SIFMA IRLS 2018 conference in Miami, insurance-linked securities (ILS) market participants and experts highlighted the benefit of increasing the speed of information flow to the market, something which could help the secondary market operate more efficiently when disaster strikes.