Kay McCarthy, head of Jersey Office at The International Stock Exchange, explores recent record-breaking listing trends at the exchange, which this year celebrates its 25th anniversary.
WRITING here towards the end of last year, I commented that 2022 was an ‘unforgettable year’. We had experienced one of the most difficult years for markets in decades with the global economy hit by multiple adverse shocks, from global geopolitical uncertainties, the war in Ukraine, inflation fears and dislocated asset prices all negatively impacting global markets.
Despite this backdrop, at The International Stock Exchange (TISE), 2022 was the second-best year for new listings since the inception of the Exchange. Undoubtedly, the difficult macro-economic environment dampened listing volumes, especially in products such as high yield bonds with greatest exposure to the broader debt capital markets. However, excluding the impact of high yield, the resilience of M&A activity and the associated well-trodden path to listing helped generate volumes that were only marginally lower than the record set in 2021.
There were 956 newly listed securities last year, which has been surpassed only by the record 1,111 new listings during 2021 and, as such, the last two years have been the most successful in the Exchange’s history. This contributed to TISE finishing last year with a total of 4,020 securities admitted to its official list, which is a rise of 10% year on year and the highest total since the Exchange opened for business in October 1998. A positive position as we entered our 25th anniversary year.
The strong flow of new bond listings on TISE demonstrates the attractiveness of our core bond market proposition in the form of our Qualified Investor Bond Market (QIBM).
We have seen continued product diversification with listings including securitisations, collateralised loan obligations (CLOs), high yield bonds, debt programmes and convertibles.
There has also been further diversification in the geographical origin of new listings – the UK remains the largest single source of new business, followed by the Channel Islands and the Isle of Man, however for the first time in the Exchange’s history more than 25% of all securities listing last year originated from the EU.
At the same time, TISE’s membership base has been expanding internationally, with new members from Ireland adding to those from Jersey, Guernsey and the Isle of Man taking the total number of listing and trading members of TISE to 43.
Within its equity market segment, TISE has maintained its position as the second largest venue for listing UK Real Estate Investment Trusts (REITs). The real estate and infrastructure sector should retain support throughout 2023 as investors continue to seek diversification and a hedge against inflation.
TISE Sustainable, Europe’s most comprehensive sustainable finance segment, also continues to grow. New admissions last year included brands such as Dutch telecommunications group VodafoneZiggo, the UK’s leading independent leasing, fleet management and vehicle outsourcing business Zenith, and renewable energy infrastructure investor Bluefield.
We started the year with the listing of a sustainability-linked bond issued by Costa Rican telecommunication brand, Liberty Costa Rica. It is the largest sustainability-linked bond issued for the digital infrastructure sector in Costa Rica and the financing ultimately supports an expansion of the fixed network and 4G/5G coverage to narrow the digital divide. The issuer has been admitted to TISE Sustainable and we expect to see increased interest in this segment in 2023.
According to analysts, sustainable bond issuance is expected to rebound amid a more certain interest rate environment and a catch-up of postponed issuances from last year. On TISE’s official list there is more than £13 billion of listings supporting environmental, social and sustainable initiatives.
Bond market trends
While the environment remains challenging with many of the central themes from last year continuing into 2023, the markets appear optimistic that central banks will pivot to focusing on growth rather than inflation. There is cautious optimism that inflation is now on a downward trend and that central banks are likely to start cutting interest rates sometime this year which should result in a sustained recovery of asset prices, and subsequently the economy.
While volatility will remain elevated, some of the challenging dynamics have been priced into debt markets and while issuance activity for high yield remains cautious, M&A activity is strong. According to PwC’s 26th Annual Global chief executive survey three-fifths (60%) of global chief executives say they are not planning to delay deals in 2023.
Despite economic headwinds and a challenging financing environment, European M&A activity is predicted to increase with the private equity sector focused on creating value in their portfolio companies where many already have deals on the horizon.
During the first couple of months of this year, at TISE we have seen an uptick in private equity related transactions and increased interest in high yield issuance. In addition, there is a steady flow of new securitisation deals originating from major US and European financial institutions. This bodes well for the remainder of the year subject to any fresh external shocks to the markets.
In addition, as well as promoting and marketing our existing core exchange business, we are taking steps to further diversify as we explore the opportunity to launch an offering within the private markets. This is an exciting proposition which is just one of the reasons why we believe that 2023 will be a landmark year in both the history and the future of the Exchange.
- This material is intended to provide general information regarding The International Stock Exchange and is not intended to, nor does it, constitute investment or other professional advice or a recommendation to buy, sell, hold or solicit any investment, security or other financial instrument or product.