Catastrophe Bonds Worth $17.5 Billion Land in EU’s Crosshairs

Asset managers with sizable holdings of catastrophe bonds are watching to see how a recent recommendation by Europe’s markets watchdog will disrupt the status quo, with some already warning of a potential selloff.

At issue is the $17.5 billion of catastrophe bonds sitting in funds sold under the UCITS label, which is a European Union designation intended to protect retail investors. The European Securities and Markets Authority recently judged that cat bonds shouldn’t be in such funds, arguing that their inherent complexity is ill-suited to the retail audience targeted in the UCITS market. The decision is now with the European ...