Catastrophe bonds hit by Japan earthquake

Catastrophe bonds hit by Japan earthquake

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The recent earthquake in Japan is causing uncertainty over whether a number of catastrophe (cat) bonds will be triggered, and what the broader consequences could be for the market.

According to Moody’s Investors Service, four cat bonds are directly exposed to Japanese earthquake risk: Muteki Ltd Series 2008–1; Valais Re Ltd Series 2008–1; Vega Capital Ltd Series 2008–1; and Vega Capital Ltd Series 2010–1.

Cat bonds are designed to transfer risks from reinsurance companies, sponsors of the deals,