We’re told by sources that the worth guidance range has been lowered for the second catastrophe bond to be sponsored by Prologis, Inc., the logistics, warehousing and supply-chain focused real estate owner and investor, while the goal size stays at $95 million for its recent Logistics Re Ltd. (Series 2024-1) US earthquake cat bond issuance.
Artemis reported back at the tip of September that Prologis, Inc. had returned for its second enterprise into the catastrophe bond market, searching for a renewal of its soon to mature first deal.
Prologis 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 within the fourth-quarter of 2021.
That first Logistics Re cat bond issued in 2021 is scheduled to mature in December of this yr and so the corporate has now returned to sponsor a renewal, as we reported.
The corporate operates as an actual estate investment trust, each owning and investing in industrial real estate assets, typically linked to the warehousing, logistics and supply-chain sectors and with a United States focus, even though it does have some global operations as well.
SPI Logistics Re Ltd. is aiming to issue a single $95 million Class A tranche of Series 2024-1 catastrophe bond notes that may provide retrocessional reinsurance to Hannover Re, which in turn will then provide the reinsurance on to captive insurer, Solution Insurance Ltd. which can in turn insure Prologis, Inc.
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, we’re told.
There might be some overlap in coverage between the 2 cat bonds, because the 2021 issuance matures at that December point, but this recent 2024 cat bond issuance is predicted to settle before the tip of October.
The exposure is again largely focused on California, with assets covered there contributing as much as 95% of the expected loss, similar to the primary deal.
The Logistics Re Series 2024-1 Class A notes could have an attachment point at $400 million of losses to Prologis’ insurance tower and canopy a percentage of losses as much as $550 million, which provides them an initial attachment probability of three.1% and an initial expected lack of 2.6%.
The notes were initially offered to cat bond investors with spread price guidance in a variety from 6.75% to 7.25%.
We’re now told that the dimensions of the issuance has not modified, still being marketed at $95 million, however the spread price guidance has now been reduced, with an updated range of 6.25% to six.75% now being offered to investors.
The primary 2021 cat bond from Logistics Re priced to pay investors a multiple-at-market of virtually 3.2 times the expected loss, but its initial expected loss was only one.094%.
So, the comparison is slightly difficult, but for reference on the mid-point of the revised guidance, the multiple-at-market paid for this recent Logistics Re 2024-1 cat bond can be 2.5 times the expected loss.
Multiples are often lower, where the EL is higher and as we reported in our first article on this deal, we do understand there have been exposure changes over the time for the reason that first cat bond was issued, as Prologis has built out its investments and real-estate assets within the areas covered.
You may read all concerning the Logistics Re Ltd. (Series 2024-1) catastrophe bond and each other cat bond issuance in our extensive Artemis Deal Directory.