Swiss Re To Launch CAT Bond

  • 03 Mar 2002
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Swiss Re will issue a catastrophe bond deal later this month led by Lehman Brothers, according to a buy-side investor. Called Redwood Capital 2, after the first series issued in December (BW, 12/24/01), the deal size should be approximately $200 million. Goldman Sachs, the other major CAT underwriter, will not be part of this deal, according to this investor. Michael Millette, a v.p. and CAT banker with Goldman, declined comment. The investor adds that the transaction is likely to get an investment-grade rating. At present, only 10% of the $2 billion in outstanding CAT bonds are investment-grade. Five percent of outstanding CAT bonds are rated single-B while the remainder are double-B.

Paul Puelo, senior v.p. with Lehman Brothers, did not comment. Judy Klugman, senior v.p. distribution with Swiss Re, declined comment, invoking Securities And Exchange Commission regulations on privately placed transactions.

CAT bond issuance enables re-insurers like Swiss Re to remove risk from their balance sheets and offers a potentially cheaper cost of funding versus re-insurance premium. Sell-siders note that the CAT pipeline is pretty light so far this year. One of the reasons offered for this is that re-insurance rates did not spike as high as expected in the aftermath of Sept. 11, making bond issuance not as attractive an alternative.

  • 03 Mar 2002

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 120,126.76 346 12.85%
2 Bank of America Merrill Lynch 99,988.41 288 10.70%
3 Wells Fargo Securities 88,516.28 265 9.47%
4 JPMorgan 69,113.88 208 7.39%
5 Credit Suisse 51,313.00 155 5.49%