(Reuters) – Mexico has increased the size of a catastrophe bond issued by MultiCat Mexico Ltd to protect the country in the event of earthquakes and hurricanes during marketing, while reducing pricing from the original guidance due to strong investor demand.
The bond was increased from $300 million to $315 million after the government increased the amount of coverage it wanted for Atlantic hurricanes, sources familiar with the deal told Reuters.
Catastrophe bonds allow insurers and reinsurers to pass on some of the natural disaster risk on their books to capital market investors, freeing up capital for alternative lines of business.
The deal was issued by Cayman Islands-based special purpose vehicle MultiCat Mexico 2012-1 Ltd last week, and is sponsored by the Fund for Natural Disasters of Mexico (FONDEN).
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