In this article from Artemis, Cory Anger, Managing Director, GC Securities, discusses the global market for catastrophe bonds, which she sees as having strong potential in 2023.
Cory said that her team is seeing a significant flow building, featuring many new catastrophe bond sponsors.
“We currently see over 30 sponsors (including potentially 10 new sponsors) that could utilize the cat bond market in 2023 subject to pricing and other terms/conditions,” she said. “We expect total issuance to at least equal 2022’s 144A cat bond issuance of USD 9.36 billion or potentially reach USD 11 billion, if market conditions improve.”
Inflows are likely to return, Cory explained, but this is very much dependent on capital market conditions and competing asset class yields as well.
“Investor allocations (particularly the ability to increase allocations) to the 144A product were constrained during 2022,” she continued. “This was primarily due to non-catastrophe loss factors such as currency fluctuations, geopolitical instability, equity and credit markets sell-off and increasing global interest rates, among other factors. Importantly, as these contributing factors become more stable, we believe allocations back into the catastrophe bond product should resume.”
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