Secondary market news

Secondary catastrophe bond trading picked up towards the end of the month in October 2016 after a slow start to the month. Primary issuance stimulated some trading and the post-hurricane Matthew released pressure on affected secondary marks.

Trading in catastrophe bonds on the secondary market saw increased activity in September as ILS investors and ILS funds traded positions and prices rose once again as seasonal spread tightening reached what is normally recognised as its peak.

One again the secondary market for catastrophe bonds remained characterised by very strong demand in August, with more buying interest than selling driving prices again. However some sellers were seen providing fund managers and investors with opportunities to diversify.

Once again, July saw very strong demand for catastrophe bond investments with the secondary market feeling the effects of demand outstripping supply of new issuance, resulting in further price rises and an active cat bond secondary trading market.

Secondary trading in the catastrophe bond and insurance-linked securities (ILS) market picked up in the first-quarter of 2016 following a less active close to 2015, however, Q2 saw trading volumes decrease again owing to reduced primary issuance, according to Aon Benfield.

Ongoing high levels of demand for catastrophe bond investments continued to push up pricing in the secondary market in June, with non-U.S. issues seeing the highest rises as the seasonal effects of the hurricane season helped to keep pricing of U.S. wind bonds a little more subdued.

Insurance-linked investors and catastrophe bond fund managers took advantage of the continued unseasonable rise in secondary market cat bond prices, to lock in investment gains, as investor demand drove them higher again in May 2016.

Demand for investing capital into catastrophe bonds drove prices higher in the secondary ILS trading market during April, as a lull in primary issuance pushed investment managers to trading desks in search of opportunities to invest.

TigerRisk Capital Markets & Advisory (TCMA), the SEC registered broker-dealer, investment banking, ILS and capital markets subsidiary of reinsurance advisory and broker TigerRisk Partners, has launched an ILS and catastrophe risk trading desk.

Trading in the secondary ILS and catastrophe bond market during the first-quarter of 2016 was far more active than the final quarter of last year, with trade volumes increasing by more than 25% according to reinsurance broker Aon Benfield.