Cat bond funds power through H1 on 30-weeks of uninterrupted gains

Pure-play cat bond investment funds accelerated through the last week of June, their 30th consecutive week of uninterrupted gains, to seal a month of strong gains in June.

A key dollar-denominated market index for cat bond funds advanced 0.5% in the week ending June 30, bringing the four week rolling gain to 1.3%, the weekly set of index data compiled by Plenum Investments shows.

EUR- and CHF-denominated index readings continue to lag the dollar marker, gaining 0.4% and 0.3% respectively for the week to bring the respective four-week rolling gains to 1.2% and just under 1%.

The cat bond rally has taken on some unprecedented proportions. The 30-week streak is the longest since the inception of the weekly publication. The June four-week gain, like most of the 4-week gains across April and May, rivals most any monthly gain seen in the prior historical data to 2011.

The dollar-denominated index is now up 11.4% from post-Ian lows and 4.2% since the final reading before Ian's Florida landfall.

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 year to date 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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