Catastrophe Bonds Emerge as Wartime Haven Trade: ESG Investing

An alternative credit market tied to natural disasters is emerging as a hedge against volatility triggered by the Iran war.

Since the US and Israel attacked Iran on Feb. 28, catastrophe bonds have weathered the market turmoil. With the conflict now in its third week, the Swiss Re Global Cat Bond Performance Index is up slightly, while the S&P 500 Index is down about 3% and the Stoxx Europe 600 Index has lost about 5%. Cat bonds also have outperformed US Treasuries and high-yield debt over the period, according to data compiled by Bloomberg.