Secondary market news

The record-breaking volume of catastrophe bond and insurance-linked securities (ILS) issuance in the first-half of 2017 has driven differing opinions on the trading activity in the secondary marketplace, according to recent ILS reports from Aon Securities and Swiss Re Capital Markets.

The record high levels of new catastrophe bond issuance seen in May 2017 has once again helped to stimulate activity in the secondary trading market, as ILS fund managers and investors looked to balance their portfolios and also deal with higher levels of maturities during the month.

The continued high level of issuance in the primary catastrophe bond market in April 2017 continued to drive an increased level of trading activity in the secondary market, as investors and ILS funds looked to swap in and out of positions as they managed new issuance allocations and the flow of maturities as well.

Trading activity in the secondary market for catastrophe bonds has declined in the first-quarter of 2017, compared to the prior year, as primary cat bond issuance accelerated to a new record and investors focused their efforts on new deals, according to Aon Securities.

Secondary trading activity of catastrophe bonds accelerated in March 2017, as the primary issuance market and pipeline of new deals picked up and investors and ILS fund managers used the marketplace to adjust portfolios and accommodate new deals.

The excess demand for investments in catastrophe bonds has begun taking its toll on the secondary market in 2017 already, beginning to push prices higher as issuance in the primary market fails to keep up with demand.

The secondary market for trading in insurance-linked securities (ILS) and catastrophe bonds got off to a relatively active start in January 2017, but appetite remains strong and the demand overhang persists, according to market participants.

Insurance-linked securities (ILS) and catastrophe bond investors will be able to take advantage of a robust primary and secondary market in 2017, driven by the expectation of an active start to the year, says Aon Securities.

The secondary trading market for catastrophe bonds was particularly active in December 2016, with almost double the amount of bond titles trading during the month compared to the prior month, as ILS funds and investors balanced portfolios in advance of the reinsurance renewal.

It’s that time of year when the secondary trading market for catastrophe bonds tends to see volumes rise in short-dated names, as insurance-linked securities (ILS) fund managers and investors look to offload cat bonds that are maturing soon to free up capital for reinvestment.