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Zenkyoren lifts Nakama Re 2023 quake cat bond target to $275m


Zenkyoren, the Japanese National Mutual Insurance Federation of Agricultural Cooperatives, has increased the target size of its new Japanese earthquake catastrophe bond Nakama Re Ltd. (Series 2023-1) to as much as $275 million.

zenkyoren-japan-insurance-reinsuranceAt the same time, the buyer of one of the largest reinsurance programs in the world is aiming to price both tranches of Nakama Re 2023-1 catastrophe bond notes towards the lower-end of initial price guidance.

Zenkyoren returned to the catastrophe bond market at the start of April, seeking $200 million or more in collateralized Japanese earthquake reinsurance protection from the capital markets through this new Nakama Re 2023-1 issuance.

This will be Zenkyoren’s thirteenth directly sponsored catastrophe bond transaction that we have listed in our extensive Deal Directory.

Nakama Re Ltd. was seeking $200 million of protection for Zenkyoren, across issue two tranches of notes designed to provide a source of Japanese earthquake reinsurance on an indemnity trigger and annual aggregate basis, across a five-year term, for the sponsor.

Now, we’re told the target size has been lifted to as much as $275 million, across the two tranches of Series 2023-1 notes Nakama Re will issue.

What was a $50 million tranche of Class A notes, is now pitched at up to $75 million in size, we understand.

While, the larger originally $150 million Class B layer that is riskier, is now being pitched at up to $200 million, we’re told.

The Class A notes come with an initial base expected loss of 0.79% and were first offered to cat bond investors with spread guidance of 2.75%, but this has now been reduced to a range of 2.5% to 2.75%.

The Class B notes which have an initial base expected loss of 1.54% were initially offered with spread guidance in a range from 4% to 4.5%, and this has now been fixed at the lower-end, at 4%, sources have told us.

At these pricing levels, the notes from this Nakama Re 2023-1 catastrophe bond are priced higher than previous Zenkyoren deals, although it is more difficult to compare given this latest issuance is annual aggregate in nature, where as recent Zenkyoren cat bonds have used a three-year rolling aggregate structural approach.

Despite that, it’s clear this will be another strong cat bond issuance result for its sponsor, despite the harder priced market environment.

You can read all about this new Nakama Re Ltd. (Series 2023-1) catastrophe bond from Zenkyoren and every other cat bond transaction in the Artemis Deal Directory.

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