22 July 2013 Alternative Risk Transfer

First half ILS issuance sets records

Despite subdued issuance in the first quarter of the year, 2013 saw the second-largest first half of new cat bond issuance in history, according to Swiss Re.

Some $3.823 billion of new issuance launched in the first six months of the year, just shy of the $3.825 billion mark set in the first half of 2007.

But the first half of 2013 did set new records for average deal size and size of the outstanding ILS market. The outstanding cat bond market reached an all-time mid-year high of $17.1 billion, exceeding the previous year-end record of $17.0 billion, set in 2007.
Swiss Re published the data in its latest  Insurance-Linked Securities (ILS) market update for the first half of 2013, which points to a flourishing ILS market backed by near-record levels of new catastrophe (cat) bond issuance in the second quarter of 2013.   
In total, 15 new transactions were issued. US hurricane risk continued its trend of being the most common peril transferred to the capital markets. 
The report also details improving market conditions in the ILS space. It said the expanding investor base is driving the increase in demand, which has provided an attractive environment for sponsors with spreads reaching an all-time low, as newly-issued bonds priced approximately 30 percent tighter than similar bonds issued in 2012.

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