East Lane Re holds roadshow for $150 million three-year catastrophe bonds via Goldman Sachs

By Paul A. Harris

St. Louis, Feb. 20 - East Lane Re III Ltd. is holding a roadshow for a $150 million offering of its 2009-1 class A three-year principal-at-risk notes (BB), according to an informed source.

Price talk is three-month Libor plus 950 bps to 1,025 bps.

The "Cat" (short for "catastrophe") bonds, which are linked exclusively to Florida hurricane risk, were presented to investors in London and Zurich during the Feb. 16 week and will be presented in New York during meetings on Monday.

The deal is being run off the investment grade desk of Goldman Sachs & Co.

The underlying insurer is Chubb Corp. (AA).

Although the East Lane deal is the year's first Cat bond, it is not yet clear whether volatility in the broader capital markets will play a hand in such deals, the informed source said.

"We've always been able to get five or six deals done during the season," said the source.

"We don't think that's going to be any different this year."

"It's possible that they could be more oversubscribed, but it's too early to tell."

Regardless of the market environment, there is a small subset of investors who will play in Cat bond deals because those investors are seeking exposure to a set of uncorrelated assets, the source explained.

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