A New Breed Of Catastrophe

Gregory, Michael
March 2004
Investment Dealers' Digest;3/29/2004, Vol. 70 Issue 13, p10
Trade Publication
Catastrophe bonds (CAT), which have been mainly used by insurers, are now evolving to serve a new generation of corporations. CAT bonds are structured so that if an issuer suffers a loss from a catastrophe, the issuer's obligation to pay interest and/or principal is either deferred or completely forgiven. Catastrophe bond issuance nearly doubled in 2003 to hit $1.8 billion compared with the previous year, sources at Moody's Investors Service Inc. said. While the insurance sector issuer base has leveled off, however, corporates could become for more active in the market, with at least one or two hopefuls in the pipeline and even more kicking around the idea.


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