Big companies choose Guernsey to issue bonds

Pedro Gonçalves
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Big companies choose Guernsey to issue bonds

Guernsey's International Stock Exchange has attracted nearly half of all new bond issuers during the first nine months of 2018, after the European Union adopted stricter rules to make bond markets more transparent.

As the jurisdiction Guernsey falls outside the EU's Market Abuse Regulation, known as MAR, which came into force in mid-2016 and is designed to improve financial disclosure, the exchange has lured big names such as streaming giant Netflix and Refinitiv, a Blackstone -controlled company spun out of Thomson Reuters, the WSJ reports.

Under EU rules, selective disclosure of information - to some investors and not other - is not allowed. Unlike the rest of the EU, where companies with publicly listed shares or bonds must make financial reporting readily available to the public, bond issuers in Guernsey can keep such information under virtual lock and key and can restrict who has access.

the use of password-protected websites to restrict access to company financial information has also lured New Look, a U.K.-based fashion retailer, United Group, a media company owned by KKR and BC Partners, and Takko, a fashion retailer owned by Apax Partners.

Fiona Le Poidevin, chief executive of the Guernsey exchange, told the Journal the 2016 EU regulations are disproportionately onerous for products such as high-yield bonds, which are held long term by sophisticated investors.

The exchange's guidance on password-protected investor sites is that access should be granted swiftly. Ms. Le Poidevin said two-thirds of bonds listed there don't require passwords to access bond documentation.

Issuers started flocking to the Channel Islands—at the expense of traditional listing venues in Dublin and Luxembourg—after the EU regulation came into force. The value of high-yield bonds issued from Guernsey went from almost nothing before July 2016 to $25.65bn in 2018, according to Dealogic, or 30% of all new European junk bond issues by value.

 

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