Tremor Technologies, the reinsurance pricing and placing platform, has announced the launch of Tremor Issuer, an online catastrophe bond issuance platform powered by the firm’s Panorama marketplace tech.
The new platform can be accessed online by investors, issuers, bankers, and brokers, and is offered via the company’s new regulated subsidiary, Tremor Capital Markets, LLC.
It’s been designed to bring transparency and price and cost efficiency to the cat bond marketplace, which is an important component of the broader insurance-linked securities (ILS) space.
Sean Bourgeois, Tremor’s Chief Executive Officer, explains: “In the last two weeks alone, we have seen four cat bonds price 15% or more below initial guidance. While this signals more capital coming back into the market which is great to see after last year’s market challenges, it also confirms that the original guidance for these bonds was extremely poor. Could prices have been even more competitive? A traditional issuer will never know because the process is negotiated rather than powered by competitive market forces. The clearing price of a bond issued today is determined when the phone gets put down, not by economics.
“Tremor Issuer will vastly improve price discovery and allocation for the issuance of cat bonds as we work with all sides of the industry to modernize the cat bond market.”
Through the new issuance platform, capital market investors bid on cat bonds by expressing their rich preferences for prices, quantities, and important contingencies confidentially, explains Tremor.
Next, Tremor’s tech brings together the entire investor market for the issuance to show aggregate supply. As a result, Tremor notes that the issuer of the bond gets to see the complete and most competitive version of the market for their bond “powered by competitive market forces, whereby optimal price is competed for and true equilibrium is revealed vs. guessed at and negotiated.”
The firm adds that its Panorama platform is ideally suited for the best execution for the issuance cat bonds. Traditional placements can take a long time to complete, and Tremor argues that the negotiation process around terms and allocations can be laborious with suboptimal results.
“By contrast, the Tremor Issuer process takes hours and all participants can be confident that they will receive what they have requested – no guesswork required. The net result is vastly improved price and cost efficiency for the entire market,” says the firm.
The launch of Tremor Issuer comes soon after the company revealed a range of cross-placement optimization tools.