Home›Insurance›Reinsurance›Plenum says subordinated insurance debt is gaining ami…

Plenum says subordinated insurance debt is gaining amid bond-market volatility

Plenum executives said subordinated insurance bonds can add roughly 140 basis points of spread, while RT1 coupons currently exceed corresponding dividend yields.

Reported · Written up by our desk · Reinsurance

In a webinar this week, executives from insurance-linked securities manager Plenum Investments said subordinated insurance debt is benefiting from volatility in government bond markets as yields move to levels they view as historically attractive.

Plenum said subordinated insurance bonds can offer an additional spread of around 140 basis points versus other corporate or government bonds, making the category stand out for fixed income investors in the current environment.

The firm also pointed to what it called a persistent insurance-sector premium in subordinated bonds, including a structural premium for RT1 over Tier 2, and noted that RT1 coupons currently exceed corresponding dividend yields.

Plenum further said supply remains more limited for insurance debt, particularly as other debt issuance is more abundant, arguing that specialist managers can be well positioned in that setting.

More like this

Sources