Despite the first half of 2025 being an active period for catastrophe bond investors in the primary issuance market, the secondary market for cat bonds was relatively subdued in terms of trading activity in comparison to the first half of 2024, according to Swiss Re Capital Markets, the insurance-linked securities (ILS) division of the global reinsurer.In its H1 2025 ILS Market Insights report, Swiss Re Capital Markets noted that the level of TRACE activity had dropped when compared to H1 2024.Investors’ healthy capital positions resulted in “a lack of natural sellers, low trade volumes and a bid heavy environment that pushed prices higher and compressed spreads,” the business unit explained.In contrast to June 2024, when investors were predominantly fully allocated and spreads started to widen, June 2025, however, experienced ongoing secondary bids as investors sought to utilise their remaining cash and further refine their portfolios in preparation for the wind season.

Moreover, after the rising secondary spreads for catastrophe bonds attributed to the occurrence of Hurricanes Helene and Milton in the fourth quarter of 2024, the market persisted in tightening during the first half of 2025, Swiss Re Capital Markets noted.“While spreads momentarily leveled off in April and May, the available cash and bid-heavy environment brought spreads down again in late June 2025,” the firm explained.Demand side dynamics continued to drive the secondary market it seems, resulting in fewer trades at times.

However, the secondary market continues to provide catastrophe bond fund managers and investors with a valuable mechanism to balance portfolios and acquire incremental risk.At times though, matching buyers and sellers can prove challenging, especially when funds are seeking to be close to fully-deployed after a period of capital raising.Swiss Re Capital Markets also which combined with a significant record set for the first-half leads the firm to suggest that the cat bond sector is positioned for an exceptional year of issuance.

Readers will be aware, that in just the opening days of the second-half, .However, another notable record was also set in recent weeks, .To view copies Artemis’ catastrophe bond market reports, make sure to ..

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