By Nell Mackenzie

LONDON (Reuters) – Catastrophe bond funds rank among the 10 best performing credit funds this year, as the hurricanes, earthquakes and other disasters that could trigger payouts have either not happened or not been sufficiently severe.

The catastrophe, or cat bonds, represent money borrowed by insurance companies from capital markets.

If the insurance company needs that money because a specific event has taken place, investors might lose their initial outlay, but if the catastrophe covered by the bond does not take place, the bond retains its value.

Funds from Securis Investment Partners, Schroders, GAM, Franklin Templeton K2 Advisors and LGT Capital Partners have all returned over 8% so far this year, among the bond funds that research firm Kepler tracks. It did not provide a year-on-year comparison.

Kepler tracks Undertakings for Collective Investment in Transferable Securities (UCITS), which are regulated like mutual funds and serve investors that want quicker, more transparent access to their money.

“The fund’s performance year-to-date is mainly driven by the current attractive reinsurance rate environment following the last few loss-heavy years,” said LGT Capital Partners which oversaw one of the top performing funds.

It pointed to a lack of any “major insured events”, but added the fund held a diversified set of bonds with different categories of catastrophe and from different regions.

HURRICANE LOSSES AND HIGHER YIELDS

Last year, losses occurred from storms such as Florida’s category five hurricane. So this year, cat bonds were issued with higher yields, thereby rewarding investors for holding them.

Peak hurricane season starts around September and U.S. hurricanes are one of the most common events covered by cat bonds, according to Morningstar.

In a report last week, it also said the cat bond market is worth over $40 billion, compared with the more than $133 trillion global bond market.

As the planet has heated up and the number of climate events has risen, so have the insured losses from natural disasters.

In the first half of 2023, insured losses hit their second-highest since 2011, at over $50 billion and severe thunderstorms accounted for 70% of that total, Swiss Re said in a separate report on Wednesday.

But events covered by cat bonds may still not have taken place, or been severe enough to generate payouts.

Another reason for the bonds’ strong performance is that many cat bonds are secured by collateral held in cash and inflation has helped to boost their value.

GAM investment specialist Ralph Gasser said cat bonds were no riskier than similarly yielding bonds.

“They provide a much better compensation of risk per unit of risk, which is largely a reflection of the supply/demand characteristics of the cat bond market,” Gasser said in an email to Reuters.

He said cat bonds averaged a 0.9% yearly loss for the last 20 years, while global corporate high-yield bonds lost about an average of 2% yearly, in that time.

Raphael Rayees, portfolio manager at Securis Investments linked the performance of their fund to trying to capture the upside of risk while reducing fund volatility.

Catastrophe bonds this year and in general, have benefited from their lack of correlation to the broader financial markets, he said.

Schroders declined to comment and Franklin Templeton did not immediately respond to a request for comment.

(Reporting by Nell Mackenzie; Additional reporting Alessandro Parodi; Editing by Amanda Cooper and Barbara Lewis)

By Nevzat Devranoglu and Orhan Coskun

ANKARA (Reuters) – Turkey’s net foreign exchange reserves surged nearly $5 billion last week, with total reserves up almost $2 billion, bankers’ calculations showed on Wednesday, resuming an uptrend since it adopted a more orthodox monetary policy following May elections.

The rebuilding of the central bank’s currency buffer is seen as a gauge of authorities’ willingness to ease controls on the lira, which has tumbled 26% since President Tayyip Erdogan was re-elected but held firm in recent weeks.

The bank’s reserves slumped to minus $5.7 billion in early June, their lowest since data publication began in 2002, as authorities sought to counter forex demand and stabilise the lira over the election period.

They have since recovered strongly.

According to calculations by five bankers, obtained by Reuters, net reserves rose $4.9 billion to $15.8 billion last week, while total reserves climbed to $115.6 billion. The bank will announce official data at 2:30 p.m. (1130 GMT) on Thursday.

Under an unorthodox policy advocated by Erdogan, the central bank slashed its benchmark interest rate to 8.5% in February from 19% in 2021 despite high inflation, triggering a lira crisis.

But under new Governor Hafize Gaye Erkan, it has hiked the rate by 900 basis points in the last two months.

The recent uptrend in reserves reversed in the week to July 28, with net forex falling $2.8 billion to $10.89 billion.

Under measures introduced last year, the central bank boosted reserves by buying at least 40% of exporters’ forex income, amounting to around $100 billion annually. This was then sold by the bank to support the lira in a practice halted since the elections.

The central bank continues to get foreign exchange from tourism and a scheme to protect lira bank deposits from depreciation known as KKM.

“We are monitoring reserves to see that the exit from the state-controlled framework continues,” a senior banker said, adding the central bank is moving gradually and maintains a “decisive” regulatory role in forex markets.

The lira has held near 27.0 to the dollar in recent weeks, after a plunge.

A source close to the matter said there were no state interventions to maintain this level.

The central bank only intervenes “in cases of extreme volatility”, so reserves will continue to rise, the source said. It was leaning on KKM to help provide forex needed by exporters and banks.

Bankers said it would be important for the rise in reserves to continue in August, when some $45-50 billion in KKM redemptions are due.

The bank has paid an estimated 300 billion lira ($11 billion) to cover depreciation costs under the scheme in June and July, with the cost in August estimated at 350 billion lira.

The amount of money deposited in KKM accounts amounts to some $116.6 billion, or 3.1 trillion lira – around a quarter of total bank deposits.

($1 = 27.0260 liras)

(Reporting by Nevzat Devranoglu and Orhan Coskun; Writing by Daren Butler; Editing by Jonathan Spicer and John Stonestreet)

By Jody Godoy

(Reuters) – Nio Inc investors can proceed as a class in a lawsuit claiming the Chinese electric vehicle maker lied about building its own factory in Shanghai during its 2018 initial public offering, a U.S. judge has ruled.

The lawsuit in federal court in New York seeks damages from Nio, its executives and underwriters for a decline in share price after the carmaker said in March 2019 that it had scrapped plans to build the new factory it had said was “under construction” during the IPO.

U.S. District Judge Nicholas Garaufis issued an order late Tuesday certifying a class of all investors who bought Nio American Depositary Shares (ADS) in the September 2018 IPO, and a class of investors who purchased ADS between Oct. 8, 2018 and March 5, 2019.

The defendants have denied the allegations. Their attorneys did not immediately reply to requests for comment.

The ruling is one of the final hurdles for the investors before a trial in the case. Securities class actions rarely go to trial; those that are not dismissed typically result in settlements. The company may also ask the judge to rule in its favor without a trial.

The investors anticipated the factory would give Nio its own manufacturing capacity and alleviate its reliance on a Chinese state-owned manufacturer some analysts viewed as “third tier.”

But construction had never started, the lawsuit alleges, citing former employees and the lack of necessary construction permits.

The investors also claimed Morgan Stanley, Goldman Sachs and several other underwriters failed to properly vet the company’s statements.

When Nio disclosed the plant would not be built in March 2019, its ADS price dropped 30%, from around $10 to $7 per share, the investors said.

Nio ADS were trading at around $13.50 per share on Wednesday, down about 3.9% from Tuesday’s closing price.The case is In re: NIO, Inc., Securities Litigation, U.S. District Court, Eastern District of New York, No. 19-cv-01424.

(Reporting by Jody Godoy in New York; editing by Jonathan Oatis)

(Reuters) -Financial losses due to supply chain disruptions dropped more than 50% on average in 2022, compared with a year earlier, but shortages and delivery delays remain challenges, according to a survey of companies being released on Thursday.

Disruptions led to an average $82 million in annual losses per company last year in key industries like aerospace, compared with $182 million in 2021, and $184 million in 2020, supply- chain risk management company Interos told Reuters ahead of publication.

The 2023 report data refers to disruptions from a year earlier as the survey was conducted in spring 2023 but asked about the preceding 12 months.

In this latest report, Interos surveyed 750 companies with annual revenues between $500 million and $50 billion from energy, financial services, oil and gas, healthcare, government and aerospace.

“The key takeaway is that people recognize it’s better than it was, but it will not go back to the way that it was in 2019,” said Interos industry analyst Tim White.

Labor and raw material constraints, as well as unforeseen disruptions remain supply chain headwinds, White said.

Executives were surveyed in the U.S., Canada and the UK and Ireland.

Globally, companies on Wednesday cited supply chains as an ongoing challenge, with Danish-listed turbine maker Vestas saying it expects disruption to continue for the rest of 2023.

Aptiv PLC said despite improvements in the supply chain, higher semiconductor pricing remains a challenge.

(Reporting by Allison Lampert in Montreal; editing by Jonathan Oatis, Kirsten Donovan)

By Alexander Marrow

(Reuters) -The rouble recovered from more than a 16-month low past 98 to the dollar on Wednesday after the central bank intervened to try and halt the Russian currency’s slide, effectively abandoning its budget rule by stopping planned foreign exchange purchases.

The rouble had sunk to 98.0725 earlier in the session, its weakest point against the dollar since March 25, 2022, hampered by strong foreign currency demand and limited supply, but it pared almost all its losses after the central bank’s move.

By 1625 GMT, the rouble was 0.1% weaker against the dollar at 97.20. It had lost 0.2% to trade at 106.64 versus the euro and shed 0.1% against the yuan to 13.43.

The Bank of Russia said it would stop conducting the finance ministry’s foreign exchange purchases as prescribed by Russia’s budget rule, in order to reduce market volatility.

The central bank has given an encouraging signal by finally reacting to the national currency’s crash, said Yevgeny Suvorov, an economist at CentroCreditBank.

The central bank’s move ultimately means the net supply of foreign currency on the market will increase to 2.3 billion roubles from 500 million roubles a day.

“That’s not much to stop the rouble’s collapse,” Suvorov said. “But at least it’s something.”

SHRINKING SURPLUS

The rouble has been under pressure this year from Russia’s shrinking balance of trade, as export revenues fall and imports rebound, falling around 28% on a year-to-date basis from levels near 70 to the dollar.

Since an abortive armed mutiny in late June, the rouble has dropped almost 13%.

It also tends to struggle early each month after losing the support of a month-end tax period that sees exporting firms convert foreign exchange revenue to meet local liabilities.

“The limited supply of foreign currency from exporters continues to exert pressure on rouble positions, due to both problems with repatriating funds and also reduced export supplies in the face of steady demand among importers,” said Egor Zhilnikov, an analyst at Promsvyazbank.

Central bank data on Wednesday showed Russia’s current account surplus shrank by 85% in the January-July period.

Yields on Russia’s benchmark 10-year OFZ bond hit 11.72%, their highest since April 2022 and well above Russia’s 8.5% key rate.

Alor Broker’s Alexey Antonov said the rouble’s depreciation was largely responsible for the drop in bond prices, which move inversely to their yields.

Russia’s finance ministry, which on Tuesday said Russia’s budget deficit had widened to around $29 billion in the January-July period, held one OFZ auction on Wednesday and cancelled another due to a lack of acceptably priced bids.

Brent crude oil, a global benchmark for Russia’s main export, was 0.5% higher at $86.61 a barrel.

Russian stock indexes were higher.

The dollar-denominated RTS index was up 0.5% at 1,004.7 points. The rouble-based MOEX Russian index was 0.5% higher at 3,099.5 points.

(Reporting by Alexander Marrow; Editing by Andrew Heavens, Sharon Singleton and Paul Simao)