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Cat bond spreads widening as market experiences mismatch

The catastrophe bond market is seeing spreads widen for practically all new issuances, with market sources telling us about a mismatch, on multiple counts, that has the effect of driving prices higher, and is also sending broader signals on the potential trajectory for catastrophe reinsurance rates at the mid-year renewals.

During the first-quarter of 2022, more tranches of property catastrophe bond notes priced above the mid-point of initial guidance, driving an average price change across all cat bonds issued of roughly +1.1%.

As we documented in our latest quarterly cat bond market report, this was only the third, quarterly positive average price change of recent years.


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