Cat bond funds gain through July, but pace slows in 34-week rally
Pure-play cat bond investment funds ploughed through another month of market advances in July, extending their secondary market streak to 34 uninterrupted weeks of gains, although the pace of gains has been clipped.
A key dollar-denominated market index for cat bond funds rose 0.8% for the four weeks ending July 28, ahead of a 0.7% gain for a EUR-denominated and 0.6% for the CHF-denominated measures, the weekly set of index data compiled by Plenum Investments showed.
The cat bond rally has taken the USD-denominated funds 12.4% above lows hit in the weeks following Hurricane Ian's late-September landfall. Valuations are 5% above pre-landfall levels.
But July does represent a slowdown: the four week rolling gain is the second lowest since points in January.
The array of core indexes across currencies had been down 6.3 to 7.3% in the weeks following Hurricane Ian on early assumption that underlying securities would suffer notable trapped capital. Views began to ease quite quickly as investors identified an array of loss-free issuance.
The ensuing take-off in 2023 has lined up with a heady run on primary market issuance, with $8.6 billion in new issuance through the first half. Total ILS capital topped the long-sought $100 billion mark by end-Q1, despite stagnation for other elements of the broader ILS market.
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