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Cat bond market finds equilibrium as spreads stabilise higher: Plenum

Spreads in the catastrophe bond market, in terms of both new primary cat bond issuance and secondary marks, appear to have stabilised, signalling the market finding a new equilibrium at higher premiums, Plenum Investments has said.

Zurich-headquartered catastrophe bond investment manager Plenum believes that spreads have now stabilised at their new higher levels.

Recently issued catastrophe bonds have seen their premiums increase “significantly”, Plenum notes, with them now reaching levels not seen since hurricane Katrina in 2005.

The increase in premiums witnessed through December 2022 and January 2023’s new cat bond issuance has ranged from 60% to a little above 100%, Plenum said, depending on the demand for new issues.


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