Singapore’s first catastrophe bond has been issued with the backing of IAG.

The $75 million bond, from special purpose reinsurance vehicle Orchard ILS, is the first Australian dollar-denominated insurance-linked security (ILS) offered globally.

It comes as Singapore looks to muscle in on the growing ILS market, which is dominated by Bermuda, the top special-purpose insurer domicile.

The southeast Asian financial hub last year introduced an ILS grant scheme that subsidises upfront issuance costs and provides other incentives.

“We have a presence in Singapore… When [Singapore] formed its ILS working group, we were very keen to join,” an IAG spokesman told insuranceNEWS.com.au.

“By issuing the bond out of Singapore we’re providing a pioneering approach to this region, which will hopefully encourage other sponsors.”

IAG says the bond is part of its catastrophe aggregate program, which covers all perils in its areas of operation.

“The bond complements our traditional reinsurance placements and provides a diversified form of reinsurance.

“IAG’s functional currency is [the Australian dollar], so this removes any currency risk associated with the bond.”