Global catastrophe bond issuance reached a record $18 billion in the first four months of the year, Swiss Re's capital markets unit reported, as pension and hedge fund demand for the uncorrelated asset class continues to outstrip new supply.
Spreads have compressed for six consecutive quarters even as insured losses from climate-linked events have trended higher, reflecting a structural rebuilding of investor risk appetite following the hard reinsurance market of 2023 to 2024.
Investor base
Specialist ILS funds remain the largest buyer group, but general fixed-income and multi-strategy hedge funds have materially increased allocations, drawn by yields that remain attractive relative to comparably rated corporate credit.