The average yield to maturity of the catastrophe bond market has fallen by a meaningful 25.5% year-on-year, according to data from Euler ILS Partners, the specialist Swiss insurance-linked securities (ILS) investment manager.In a recent report, Euler ILS Partners highlights the strong growth in the catastrophe bond market, as well as the fact its exposure remains largely concentrated on the US hurricane peril.According to the ILS manager’s data, the number of catastrophe bonds currently outstanding in the market has risen by an impressive 15.1% in the year to September 30th 2025.At the same time and indicating larger average deal sizes, the overall size of the catastrophe bond market, in terms of risk capital outstanding, grew by almost 20% over that year, according to Euler ILS Partners’ data.

Euler’s data excludes life, mortgage and private cat bonds.While the average coupon has fallen by 1.4%, to an average of 7.87% at September 30th, at the same time so too has the average expected loss of the cat bond market, which was down 4% over the same period.But, the clearest signal of the tightening of market spreads is evident in Euler ILS Partners’ data on the average yield to maturity, excluding collateral return, of the cat bond market.

The ILS investment manager sees this metric as having dropped 25.5% year-on-year, again as of September 30th 2025, to stand at 6.44%.Of course, the weight of capital and level of investor interest has driven the tightening of spreads and therefore reduced pricing of new catastrophe bond issues in the market and continues to do so.Euler’s data point is another metric for the market and this yield to maturity decline is also reflected in other data points we collect.

For example, the insurance risk spread component, or discount margin, of has fallen by more than 16% in the last year.The overall yield of cat bonds, so including the collateral return, has fallen by a similar level.In issuance terms, the decline in spreads is perhaps most evident .

The average multiple-at-market of new cat bond issues in 2023 was 4.54 times the expected loss, which then declined to 3.71 times in 2024 and has dropped further to an average of 3.26 times EL in 2025 to-date.As that new issuance at tighter spreads feeds into the outstanding market, it lowers the running yield and yield to maturity.We can also show , in another of our charts and this also adds to the story of strong appetites and abundant capital driving strong execution and lower priced coverage for cat bond sponsors.

With fourth-quarter catastrophe bond issuance already pricing down in all cases, there is a strong chance these metrics decline further before some kind of stabilisation is found.It will take a period of robust issuance to absorb some of the excess cash in the catastrophe bond market and satisfy investor demand for the assets.How robust is a challenging question, but it feels like the record pace needs to persist at least into Q1 2026 for the market to become more balanced.

Finally, Euler ILS Partners also shared data that shows at September 30th 34.5% of the outstanding cat bond market was US hurricane bonds, while 41.5% were multi-peril deals with US named storm exposure.Which means around 76% of the catastrophe bond market was exposed to US hurricane loss events at that time, demonstrating that this remains the peak peril where capital markets capacity is most needed for reinsurance and retrocessional protection.Additionally and demonstrating the clear utility of cat bonds, Euler ILS Partners further noted that around 24% of outstanding catastrophe bonds are from residual market, coastal and take-out insurers, as the capital market continues to play a key role in supporting the provision of property insurance in high-catastrophe exposed regions..

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