Guernsey establishes itself as the capital of risky debt in Europe

Posted on Feb 12, 2019 2021 at 16:36Updated Feb 12, 2019 2021 at 16:42

It is a confetti posed on the English Channel, barely 65 square kilometers. That is less than a sixtieth the size of the European Union. And yet, last year, Guernsey attracted more than a third of high yield debt issuance in Europe. These are bonds with low credit quality: they have a rating of BB + or less. More specifically, of the 158 new high yield bonds issued on the Old Continent in 2020, 57 are listed on the Saint Peter Port Stock Exchange, modestly called The International Stock Exchange (TISE).

Why such an interest ? The answer lies in the very special status of the Channel Islands, to which Guernsey belongs. Located not far from the French coast and having linked very strong relations with the United Kingdom in terms of currency and defense, they are independent. And therefore located outside the territory of the European Union. This argument turned out to be decisive in 2016, when Brussels adopted its MAR regulation, on market abuse, which imposes a number of transparency rules on issuers. And in particular identical access to financial information for all investors.

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