Payrolls, Retail
If insurance losses in the 2012 and 2013 hurricane seasons pass a threshold, principal will be transferred to Citizens Property Insurance and bondholders will lose that portion of their principal and the future interest payments allocated to it, according to an April 20 document posted on the insurer's website.
Payments linked to natural disasters help insulate the debt from the risk that a fragile U.S. economic recovery will hinder companies' abilities to boost sales or generate the cash required to pay off obligations.
Employment increased by 163,000 last month, helped by a pickup at automakers and health-care providers, after a revised 64,000 June advance, Labor Department data showed. The median estimate of 89 economists surveyed by Bloomberg called for a rise of 100,000.
The jobless rate, based on a separate survey of households, climbed to 8.3 percent in July, marking the 42nd straight month above 8 percent. Retail sales by auto dealers to department stores rose 0.8 percent more in July, the biggest since February and first gain in four months, according to Commerce Department figures released on Aug. 14.
Portfolio 'Diversifier'
Cat bonds, which gained 3.3 percent last year even after a 4 percent drop in the weeks following Japan's 8.9-magnitude temblor on March 11, have posted positive gains every year since at least 2002.
The debt returned 2.3 percent in 2008, when the collapse of Lehman Brothers Holdings Inc. contributed to a 37 percent tumble in the S&P 500 index of U.S. stocks and an 11 percent loss for corporate debt.
"It's a diversifier to almost any other asset class out there," Judy Klugman, a managing director at Swiss Re Capital Markets, which issues and underwrites the securities, said in a telephone interview. The bonds "provide real value for issuers and investors, so that can only mean it has real legs for the future."