Cat bond rally holds through January, adds next 1.5% YTD
Pure-play cat bond investment funds rose every week of the new year, adding 1.5% in gains to the string of uninterrupted gains dating back well over a year, a weekly index of bond fund pricing compiled by Plenum Investments shows.
The dollar-denominated market index for cat bond funds rose 0.4% in the week through February 2, its 61st consecutive weekly gain. That makes the gain 1.5% for the year to date, 12.3% since the last reading before Hurricane Ian and 20.3% since post-Ian lows.
Euro- and Swiss franc-denominated indexes have continued to lag the gains of the dollar measure so far in 2024, as they did throughout 2023.
Secondary market gains have come despite a strong supply of new issuance on the primary market, ultimately ending in a record annual sum for 2023 that appears to be keeping a close pace in 2024.
The cat bond market grew by over $7 billion, or 21%, to over $42 billion, an all-time high, analysts at Aon said in their year-end summary to the market. 2023 broke the record for the largest-ever level of catastrophe bond issuance, at $15.4 billion, Aon claimed, citing deals from 30 issuing insurers and 14 issuing reinsurers for a combined total of $10.1 billion, plus government entities with $4.8 billion issued.
The array of total return performance indexes, published weekly by Plenum Investments, are built on broker quotes for a group of 15 pure-play cat bond UCITS investment funds. Sub-indexes divvy up results by currency unit class and a classification of risk profile subject to semi-annual review.
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