Some catastrophe bond funds have been able to moderate the impacts of broadly widening spreads through their diversification in recent weeks, with diversifying perils and regions experiencing less significant widening on outstanding cat bonds, so delivering better returns in May and June.
We’ve been documenting the spread widening seen across the catastrophe bond market in recent months, as cat bond spreads began widening in earnest in early April, with a supply-demand mismatch, as well as investor risk aversion, seen as the main drivers of this trend.
While some believe the effects of the spread widening may be felt through the rest of the year, as we’ve also reported recently, there is now some evidence that the widening has slowed, or perhaps even come to a halt.
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