(Bloomberg) – Bonds tied to weather risks tumbled the most in four years as Hurricane Matthew lashed Florida.
The Swiss Re Cat Bond Price Return Index dropped 1.7 percent this week, the steepest decline since Superstorm Sandy in 2012. The benchmark, which is recalculated every Friday, had climbed 14 straight weeks through Sept. 23.
Investors in the securities get above-market yields in exchange for the risk that principal could be wiped out by a major disaster in a specified area. S&P Global Ratings said 15 catastrophe bonds risk losses from Matthew, including the $1.5 billion Everglades Re, which protects exclusively against losses in Florida.
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