The almost universal inclusion of US wind risk in the catastrophe bonds put together this year could have led to less demand for products than would otherwise have been seen, according to a Guy Carpenter update on catastrophe bond issues this year. Although eight cat bond deals were completed in Q2, with $2.05bn of risk capital issued, $1.7bn of this included exposure to US wind. Only one transaction did not have a US wind component, the State Farm/Merna Re II deal, which had exposure solely to a New Madrid earthquake. "While current appetite for additional US wind risk is limited, there is significant investor appetite for other peak, non-peak and diversifying perils" Guy Carpenter said. Despite the active Q2, the bond market is still a fraction down relative to the end of the first quarter and 5% down on the end of last year. Guy Carpenter noted that the huge level of activity during  the last three weeks of April and the month of May "contributed to an inflection point with respect to US wind appetite". What was described as a "homogeneous issuance surge" led to some investors reaching their US wind exposure limit. It was noted that there was also some secondary market activity where some US wind risk owners were willing to sell on the secondary market, at a significant discount. That further soaked up new issuance appetite. This meant that "transactions coming to market in late April or May faced more challenging market conditions which is some cases resulted in concessions being made by protection buyers with respect to deal size and spread levels". One notable sufferer was USAA's Residential Re 2010, which came to market in late May and which in three of the tranches missed its target sales and offered a higher spread than the initial midpoint guidance. Nationwide's Caelus Re II only just missed its $200m target, but did so only by offering a final spread more than 10% higher than the midpoint of initial guidance.