Conduit Re gets debut Stabilitas cat bond at $100m priced 9% below mid-point

Conduit Re has now secured its debut catastrophe bond deal, with the company achieving the $100 million target for the Stabilitas Re Ltd. (Series 2023-1) retro reinsurance cat bond, while the notes have now been priced some 9% below the initial guidance mid-point.

It’s a good result for global reinsurer Conduit Re in its first visit to the catastrophe bond market for protection, securing the targeted retrocession it was seeking, but at lower than originally envisaged pricing.

Of course, that’s a function of cat bond market conditions and investor appetite to a degree, but it also demonstrates cat bond investor and fund manager confidence in Conduit Re as a reinsurance underwriting concern, which will please the company.

As we reported back in May, Conduit Re was entering the catastrophe bond market with a debut issuance, looking to bring the capital markets into its retrocessional reinsurance arrangements on a fully-securitized basis.

Conduit Re had established Stabilitas Re Ltd. in Bermuda, with a first $100 million issuance marketed to provide a source of both US named storm and US earthquake retrocessional reinsurance protection for the company.

The Series 2023-1 Class A notes Stabilitas Re will issue are set to provide Conduit Re with retro protection on an industry loss trigger and annual aggregate basis, across a roughly three-year term to the end of May 2026.

The $100 million of notes are now priced, we understand, securing that coverage for Conduit.

The notes come with an initial base expected loss of 2.7% and were initially offered to cat bond investors with price guidance of between 9% and 9.75%.

As we reported last week in an update on the Stabilitas Re cat bond deal, that target for the pricing had been lowered, with an updated spread guidance of between 8.5% and 9% being offered to investors.

We’re now told that the notes have been priced at the bottom-end of the already reduced guidance, to pay investors a spread of 8.5%, so this represents a roughly 9% decline in pricing from the initial guidance mid-point.

Which is a relatively low multiple-at-market, with the spread just 3.15 times the expected loss, indicating a strong result on pricing its first cat bond for Conduit Re.

You can read all about Conduit Re’s first Stabilitas Re Ltd. (Series 2023-1) catastrophe bond and every transaction issued since 1996 in the Artemis Deal Directory.