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Franklin Templeton turns more bullish on catastrophe bonds for Q3 2026
For Q2 2026, catastrophe bond and related ILS issuance reached nearly $11.33 billion across 48 transactions, the most active quarter on record.
Franklin Templeton Investment Solutions, the hedge fund-focused arm of the global asset manager, raised its conviction on catastrophe bonds for Q3 2026, moving its stance from overweight to strongly overweight while keeping its view on other insurance-linked securities at neutral, according to Artemis.
The firm pointed to strong 2026 issuance, transaction upsizings and first-time sponsors, noting that Q2 2026 saw catastrophe bond and related ILS issuance hit nearly $11.33 billion, with 48 transactions coming to market, the most active quarter in the market’s history. Artemis also reported that Franklin Templeton recorded nine new market entrants sponsoring their debut catastrophe bonds in the quarter, breaking the previous record of eight first-time sponsors.
Franklin Templeton also discussed the upcoming 2026 Atlantic hurricane season, which began June 1, saying most major forecasters are projecting near-average activity as El Niño conditions are expected to develop during peak months. It cautioned that catastrophe bond outcomes depend more on factors like storm track, landfall, insured exposure and loss characteristics, and that a single major hurricane can materially affect the market.
The asset manager said catastrophe bond spreads have moderated from post-2022 to 2023 dislocation levels, but rebounded from late 2025 lows. Artemis added that Franklin Templeton’s conviction-focused z-score rose to 1.1 for Q3 2026, placing cat bonds third among the firm’s conviction scores for the quarter.