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Twenty-Twenty

Friday, 11 Dec 2020

Twenty-twenty will remain etched on our memories for a lifetime and beyond.  How could we have predicted the path that this first year of a new decade might take?  As the year began, a US news outlet reported upon 7 cases of COVID-19 in the US and 9,927 cases worldwide.  This new virus was a silent clock that went on to define every reference to 2020.

Business continuity

In business, the impact of COVID-19 has created nothing short of a massive challenge.  For many, the challenge was too great and led to businesses being forced to permanently close their doors. For others, government support schemes provided some welcome assistance that boosted cashflow requirements and provided temporary relief.  For some, that support continues in a hope that business may resume in the medium term, whereas other businesses acted rapidly to adapt their offering and sought new pathways for revenue generation, often providing much needed services to protect and support local communities. 

Business continuity plans were certainly tested across our industry of professional and financial services.  For TISE, mid-March saw a swift adaptation to working from home across our entire organisation and a necessity to keep the Exchange fully operational.  Our market surveillance team worked tirelessly to maintain market integrity, whilst adapting to the new challenges that were presented to our issuers, not least around the physical execution and submission of documents during lockdown, as well as delays around both the production of financial statements and the completion of issuer audits.  New listing applications did not abate in their volume and we reported that the Exchange had seen more new listings during the first six months of 2020 than in the same period of any other year since the business was established in 1998.       

(Re)financing

The early part of the year saw new listings related to private equity and real estate transactions.  Many of the listings concerned transactions that would have been agreed prior to the second quarter and were in the process of completion through the initial part of lockdown.  Hence, there was something of a time delay and at the mid-year juncture, we remained cautious on our outlook for the remainder of 2020. Nevertheless, and despite the backdrop, new applications have continued in not dissimilar volume and have become increasingly related to corporate refinancing, whether opportunistic or essential, as well as greater proportions of securitisations and high yield bonds as the year has progressed.  

As we see a trend of corporate refinancing, national organisations have also turned their attention to refinancing as the impact of COVID-19 is expected to cause massive economic ramifications for many years to come.  In certain cases, supranational debt has been issued through public markets as a means for accessing additional funds, at reasonable cost and whilst often provided a means for creating greater public engagement and ownership.  The UK Chancellor of the Exchequer also made a series of announcements that included the intention for the UK Treasury’s first green gilts to be issued in 2021.  A move that was timely and closely followed the governments of Germany and Sweden having already issued sovereign green bonds. 

Governance

Corporate governance came to the fore during the course of 2020, as company boards were required to make significant and often difficult decisions.  For some, the advantages of a sound governance framework, incorporating quality information and timely communication flow aided the decision-making process at such a pivotal juncture.  The announcement of the UK’s Financial Conduct Authority (FCA) around proposals to improve climate change disclosures by issuers and information to consumers on green financial products and services, was also timely and in no small way, demonstrated that good governance remains vital and a message that we continue to promote.

Community

As we reflect on a year of massive change, the need to adapt and remain resilient and support our families, colleagues and communities, home schooling, the rise of local staycations and the absence of commuting, business travel, an abundance of webinars and Zoom meetings, it is our community achievements that resonate the most.  In the Isle of Man, I was delighted that TISE could become involved with a local campaign, to record and highlight the remarkable actions that many individuals and groups in our community have made as COVID-19 continues to impact our lives. 

We look forward to 2021 and a year which will undoubtedly embrace further change and the continued evolution of working practises.  TISE will continue to play its role in our local communities and the wider capital markets community, by supporting enterprise and endeavours for businesses to build back stronger after the ramifications of COVID-19. 

Originally published in the December issue of Isle of Man Portfolio.

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Carolyn Gelling
Carolyn Gelling
Head of Isle of Man Office