Price guidance lowered again for Prologis’ $95m Logistics Re US quake cat bond
The price guidance range has been lowered for a second time for the latest catastrophe bond to be sponsored by Prologis, Inc., the logistics, warehousing and supply-chain focused real estate owner and investor, while the target size is still unchanged at $95 million for the Logistics Re Ltd. (Series 2024-1) US earthquake cat bond issuance.
We had reported back at the end of September that Prologis, Inc. was back and seeking its second catastrophe bond issuance, looking for a renewal of its soon to mature first deal.
Prologis had previously secured $95 million of multi-year, earthquake focused property catastrophe insurance protection through the successful issuance of a Logistics Re Ltd. (Series 2021-1) cat bond in the fourth-quarter of 2021, which is now scheduled to mature in December of this year.
The $95 million of Series 2024-1 Class A notes Logistics Re is issuing will provide Prologis with a just over three-year source of US earthquake insurance protection on an indemnity and per-occurrence basis, with maturity slated for mid-December 2027.
Initially, with a $95 million target to replace the soon to mature coverage fully, although with changes to the exposure base evidenced in the higher expected loss of the 2024-1 notes, the Logistics Re 2024-1 catastrophe bond was offered with price guidance of between 6.75% and 7.25%.
The Logistics Re Series 2024-1 Class A notes come with an initial attachment probability of 3.1% and an initial expected loss of 2.6%.
As we reported earlier this week, the price guidance was then lowered, with a new range of 6.25% to 6.75% being offered.
Now, we’re told that the price guidance has fallen even further, with a range of 6% to 6.25% offered to investors.
Which implies very strong execution into the catastrophe bond market for Prologis’ second issuance.
While this might surprise some given the market is facing some uncertainty and losses due to recent hurricane activity, this being a diversifying peril, the first issuance out of the blocks after the typical seasonal lull, and the fact there is cash on-hand at some cat bond fund managers, has all made it a conducive market to issue into.
It’s also worth considering that, while a loss event like hurricane Milton might result in a desire for higher returns locally in Florida, in the scope of the entire cat bond market it is not going to have a major effect, with the losses from the storm absorbed easily into one or two months of seasonality loaded returns for the majority of ILS strategies.
Hence, strong execution with this deal is not surprising even in the context of potential Milton losses.
You can read all about the Logistics Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond issuance in our extensive Artemis Deal Directory.
