Cat bonds are defying global trends with double-digit returns
As bond markets everywhere get battered by higher interest rates, deficit angst and hawkish central bankers, one class of debt instrument is handing creditors record returns: catastrophe bonds.
by gautam naik, bloomberg news
Investors in the USD 40bn market for so-called cat bonds have literally been sitting out the storm to reap returns as high as 16% this year. Because of the way the bonds are structured, their coupons keep going up as Treasury yields rise, and investors get a sizable risk premium on their capital, as long as catastrophe doesn’t hit.
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