secondary cat bond

A more balanced ratio of buyers to sellers in the secondary market for catastrophe bonds resulted in a greater degree of equilibrium during January 2016, helping to support and stabilise prices, while the market saw elevated liquidity thanks to post-renewal portfolio adjustments.

Liquidity in the secondary market for catastrophe bonds rose in December, as an active period of primary cat bond issuance combined with the approach of the key January reinsurance renewals, stimulated investor portfolio rebalancing.

An increase in primary catastrophe bond deal-flow, as well as the approach of the key reinsurance renewals on 1st January, stimulated greater liquidity in the secondary market for cat bonds in November.

The seasonal spread tightening in secondary prices of catastrophe bonds decelerated in October, as the U.S. wind season passed its peak and ILS investors and managers began to anticipate another loss free hurricane season.

Higher demand for secondary market catastrophe bond and ILS investment opportunities helped to drive prices higher in September, which alongside seasonality in the peak month of the U.S. wind season, drove attractive cat bond returns in the month.

Levels of trading in the secondary market for catastrophe bonds dropped in August, despite global financial market volatility, as the summer holidays hit the appetite to trade and investors looked to hold positions to benefit from seasonal spread tightening.

GC Securities, the investment banking, catastrophe bond and capital markets arm of reinsurance broker Guy Carpenter, said today that it expects the catastrophe bond pricing floor, which was seen during the second-quarter, will persist for the near future.

Trading activity in the secondary market for catastrophe bonds and insurance-linked securities (ILS) was high in the month of July, as investors sought to deploy capital and balance portfolios, all of which has contributed to the stabilisation of prices and a positive cat bond market return.

The secondary catastrophe bond market saw further pressure on prices in May, resulting in opportunities for bond pickers during the month, as some names could be picked up at reasonable, below par pricing.

The downward price pressure seen on many bonds in the secondary market for trading in catastrophe bonds and insurance-linked securities (ILS) during March has persisted into April, as lower yielding cat bonds particularly struggled.