Nomura to Provide Catastrophe Risk Hedging Solutions
Tokyo, October 17, 2007 – Nomura Securities Co., Ltd., a wholly-owned subsidiary of Nomura Holdings, Inc., today announced that it will start providing its Japanese clients with risk hedging solutions to transfer catastrophe related risk to the capital markets via derivatives and catastrophe bonds.
In its first deal, Nomura arranged an earthquake derivative between East Japan Railway Company and Munich Re, the second largest reinsurance company based in Germany. The derivative carries a US$260 million notional principal and tenure of five years. East Japan Railway Company will pay a yen-denominated premium and will receive a US dollar payment in the event of an earthquake in the southern Kanto region of Japan in which the magnitude exceeds a predetermined level.
Munich Re, the recipient of the earthquake risk from East Japan Railway Company, has transferred this risk to the capital markets through issuance of a catastrophe bond via a special purpose vehicle. The catastrophe bond was well received by investors despite recent uncertainties caused by the US subprime issue.
Nomura will continue to deliver innovative hedging solutions to its clients while also offering products that meet the various risk appetite of investors.
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Nomura Group
Nomura is a global financial services group dedicated to providing a broad range of financial services for individual, institutional, corporate and government clients. The Group offers a diverse line of competitive products and value-added financial and advisory solutions through its global headquarters in Tokyo, over 150 branches in Japan, and an international network in 30 countries; with regional headquarters in Hong Kong, London, and New York. The Group's business activities include investment consultation and brokerage services for retail investors in Japan, and, on a global basis, brokerage services, securities underwriting, investment banking advisory services, merchant banking, and asset management. For further information about Nomura please visit our website at www.nomura.com.
