Peak Re’s target for Black Kite Re cat bond raised to ~$150m

Hong Kong headquartered global reinsurer Peak Reinsurance Company (Peak Re) has raised its target for its first ever catastrophe bond, with the Hong Kong domiciled Black Kite Re Limited (Series 2022-1) issuance now aiming to secure up to $150 million of retrocession for the company.

Peak Re entered the catastrophe bond market for the first time a fortnight ago, seeking $75 million of industry loss trigger based Japanese typhoon retrocessional reinsurance with its debut Black Kite Re cat bond deal.

Not only is this the first cat bond from Peak Re, it’s also only the second to be located in and issued out of Hong Kong, since the special administrative region of China enacted its special purpose reinsurance vehicle and insurance-linked securities (ILS) regulations.

We can now report that Peak Re’s appetite for retrocession has risen, as sources have told us the target size for its first Black Kite Re catastrophe bond has been raised, with as much as $150 million of protection now sought by the reinsurer.

At the same time, we’re told the pricing for this Black Kite Re has also risen, now looking likely to settle above guidance, like so many other recent cat bond deals.

With its first cat bond, Peak Re is seeking a capital market backed source of collateralized Japanese typhoon retrocession cover, with the notes being issued by Black Kite Re Limited structured to use an industry loss trigger on a per-occurrence basis across a three-year period from June.

The attachment point for the now up to $150 million of Class A notes Black Kite Re will issue, equate to a $12.5 billion Japan typhoon industry loss, as reported by CRESTA, while the exhaustion point will be at $15 billion.

So the up to $150 million of Class A notes to be issued by Black Kite Re will have an initial base expected loss of 3.22% and were first offered to cat bond investors with price guidance in a range from 5.25% to 5.75%.

We’re now told the price guidance has been elevated, with a new coupon guidance range of 6.5% to 7% being offered to investors, making this the latest catastrophe bond that will price above its initial guidance.

The price increase is not unexpected, given the significant spread widening seen across the catastrophe bond market, but with this being a diversifying peril in Japanese typhoon risk, coming to market at a time when most other deals are US peril focused, it really drives home investors demands for higher spreads at this time.

As a result, it is good to learn that Peak Re aims to upsize its first ever catastrophe bond, despite the higher cat bond market pricing.

You can read all about this Black Kite Re Limited (Series 2022-1) catastrophe bond from Peak Re, as well as every other cat bond transaction in our extensive Artemis Deal Directory.