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Cat bond yields fall as pricing normalises, Euler ILS Partners says

Euler ILS Partners reported the average coupon on outstanding catastrophe bonds at 7.1% at end-June 2026, down 10.5% year on year.

Reported · Written up by our desk · Reinsurance

Catastrophe bond yields have declined over the past two years, and Euler ILS Partners attributes the move to normalisation of pricing rather than a structural shift in demand, according to the Swiss ILS manager.

Euler ILS Partners said the market continued to expand through the second quarter of 2026, with both the outstanding cat bond market size increasing and the number of outstanding deals rising, which it linked to sustained sponsor activity and robust investor demand. It also pointed to primary market pricing moderating from 2023 and 2024 peak levels, plus easing collateral yields, which reduced overall USD return potential from its high.

As of end-June 2026, Euler ILS Partners reported the average coupon of outstanding catastrophe bonds at 7.12%, down around 10.5% year on year from 7.56% at end of Q1. The manager also put the average yield to maturity, excluding collateral return, at 5.98% as of June 30, 2026, down 21.4% year on year but up from 5.86% at the end of the first quarter.

Euler ILS Partners said the market’s average expected loss rose slightly from 2.29% at end-Q1 2026 to 2.31% by end-Q2, while noting that cat bonds delivered positive early-2026 performance, with the Plenum Cat Bond UCITS Fund Index returning 3.16% year to date as of end-June and 11.04% annualised over three years.

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