KEEN SUPPORT FOR BOSPHORUS RE SEES UPSIZING AND COUPON FALL

The Bosphorus Re 1 catastrophe bond, designed to transfer risk from the Turkish Catastrophe Insurance Pool (TCIP) to the capital markets, has upsized to $400m from the original $100m in the face of keen investor demand. The coupon was also cut to 2.5%, from an original range of 2.75% to 3.75%. The TCIP had recently obtained cat bond protection through Munich Re-sponsored Ianus. This expired in 2012 and exposed investors to European windstorm risk as well as Turkish earthquake. That €50m deal did not generate much investor interest, although this could perhaps be explained by the fact that it was offered at the height of the European financial crisis. TCIP has now gone to the capital markets more directly. Bosphorus Re is offering cover on a per-occurrence basis, using a parametric trigger based on data reported by Kandilli Rasathanesi ve Deprem Araştirma Enstitüsü (the Kandilli observatory and earthquake research institute, or KOERI). Artemis reported that USGS was a likely back-up. Investors are protected against TCIP defaulting through the pool's payment of premiums into a periodic payment deposit account, with 190 days of premium being put into the account in advance.