‘Firms attracted by our service’
SERVICE LEVELS offered by the Crown Dependencies are attracting bond issuers that might once have gone to Luxembourg or Ireland.
The International Stock Exchange, which has offices in Guernsey, Jersey and the Isle of Man, has seen much of its current growth from the listing of high-yield bonds that find new European regulations cumbersome. Last year, TISE saw a 44% increase in listings.
It’s now estimated that 85-90% of all new high-yield bonds issued come to TISE rather than EU centres. That initially caused negative comments from those centres, but the Association of Financial Markets in Europe found that the quality of service was comparable and the standards high.
‘Many of the companies are private but are listed and so have that visibility. They are not coming to the islands to hide or avoid scrutiny,’ said the exchange’s Guernsey-based head of communications, Mark Oliphant. ‘They are coming for the service.’
The success in this area is evidence that regulating according to the type of investment provides flexibility in the islands, in comparison to unnecessarily onerous rules in the EU. In the second half of last year, 50 issuers of high-yield bonds chose to list on TISE, including a 1.3bn euro high-yield bond from Netflix.
Changes to the Real Estate Investment Trust regime in the UK have also produced growth in business for TISE, Mr Oliphant said. Companies investing in property in the UK have to be UK tax resident, although they can be incorporated in different jurisdictions. They also have to be listed on a recognised stock exchange, and a quarter of all UK REITs are now listed on TISE, he said.
In among all this financial services activity, TISE is still keen to provide traditional stock exchange services to local and UK trading companies. Exchange officials believe that, particularly due to the uncertainty surrounding Brexit, TISE offers a more stable alternative venue for small and medium-sized businesses. Bank lending and alternative finance are also hard to come by, and raising capital on TISE could be more cost effective, they point out.