secondary cat bond

The outstanding catastrophe bond market returned over 1.5% in September, following on from an even healthier 1.7% return in August, demonstrating that despite declines in pricing, catastrophe bond returns remain a very attractive proposition for institutional investors.

The insurance-linked securities and reinsurance-linked investment unit of investment manager Credit Suisse continued to move its capital out of catastrophe bonds and into reinsurance-linked assets with better underlying returns during the month of July.

After more than two and a half years the Swiss Re Global Cat Bond Performance Price Return index, which tracks the price return for all outstanding USD denominated cat bonds, has made it back to its highest level since the index plummeted after the Tohoku, Japan earthquake and tsunami.

The secondary market for catastrophe bond and insurance-linked securities notes saw typical seasonal activity in August apart from a notable lack of any threat from U.S. hurricanes. Seasonality has seen U.S. wind cat bond spreads tighten, despite the lack of any U.S. wind so far this year.

Spread tightening on catastrophe bonds exposed to U.S. wind risk has lifted the secondary cat bond market indices in recent weeks. Now deep in the middle of the Atlantic hurricane season, typical seasonality has returned to secondary cat bond prices and values have increased on hurricane exposed bonds.

The month of July saw the recent higher activity levels in the secondary market for catastrophe bonds persist, as investors further rebalance portfolios in order to take on new cat bond issues and some investors continued to take advantage of recent price rises to capitalise on mark-to-market gains.

Investment manager Credit Suisse has continued to offload positions in certain catastrophe bonds on the secondary market to take advantage of mark-to-market price gains during the month of June. As we wrote a month ago, Credit Suisse has recently found value in capitalising on secondary market cat bond price rises.

In its latest look at the catastrophe bond and insurance-linked securities (ILS) market reinsurer Swiss Re suggests that the tight spread environment seen on cat bond issues through 2013 so far is set to continue. Tighter spreads and lower pricing has been driven by investor demand providing an attractive environment for cat bond sponsors.

Trading volumes in the secondary market for catastrophe bond notes have picked up in the last couple of months, according to investment managers and trading desks. The key reason for this heightened trading activity has been the high issuance seen in the primary market into June, but other factors also served to make the secondary […]

One of the interesting features of the catastrophe bond market in 2013 was the trend earlier this year that saw secondary cat bond market prices rise through February, March and April. This was triggered at first by lower than expected first-quarter cat bond issuance but spreads continued to tighten right up to May, helping catastrophe […]