2 weeks ago
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Mapfre Re has now successfully priced its debut catastrophe bond, with the Recoletos Re DAC (Series 2024-1) issuance now secured to provide the reinsurance company with an upsized $125 million of retrocession, with the notes priced below the initial guidance range that had been offered.
Spanish global reinsurance company Mapfre Re ventured into the catastrophe bond market for the first time in late November this year.
The initial target with its debut Recoletos Re catastrophe bond issuance, was for Mapfre Re to secure $100 million in annual aggregate US named storm retrocessional reinsurance protection from capital market investors.
As we later reported, the target size of this Recoletos Re cat bond was increased to $125 million in response to investor demand, while the spread guidance was lowered at the same time.
Now, sources have told Artemis that the notes have been successfully priced to provide the upsized target of $125 million in retrocession, while the spread was finalised at the bottom-end of the reduced price guidance.
As a result, it is now confirmed that Irish domiciled special purpose vehicle Recoletos Re DAC will issue $125 million of Series 2024-1 Class A notes.
These notes will provide sponsor Mapfre Re with a collateralized source of annual aggregate and territory weighted industry-loss triggered retro protection, over a three calendar year term to the end of 2027, with the covered peril being named storms in the United States and DC.
Having started as a $100 million issuance, the now confirmed to be $125 million of Series 2024-1 Class A notes that Recoletos Re DAC will issue have an initial expected loss of 2.04%. There were at first offered to investors with spread price guidance in a range from 5.5% to 6.25%, but the guidance was then updated at a lower level, of 5% to 5.5%.
We’re now told that the notes were priced to pay investors a spread of 5%, so the bottom of the revised and lowered price guidance range.
Which represents a roughly 15% drop in the spread from the mid-point of initial price guidance, which is strong execution for sponsor Mapfre Re for its debut catastrophe bond issuance.
Industry-loss trigger cat bonds like this have been pricing down the most in recent weeks. But now, that decline in pricing is being seen more broadly across indemnity deals as well, although the quantum of the price declines still appears highest for index-trigger cat bonds at this time, indicating very high demand for such structures.
It’s encouraging to see a first time catastrophe bond sponsor like Mapfre Re enjoying attractive terms for its first visit to the market. It should help encourage the company back when it needs more retrocession and also encourage other potential sponsors to the cat bond market as well.
You can read all about this new Recoletos Re DAC (Series 2024-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.
English (US) ·