Black Monday sell-off
Oil prices and coronavirus
As explored in our news pages this week, markets endured their worst falls since the financial crisis on 9 March – a day referred to as ‘Black Monday’. It was, ostensibly, a perfect storm: shares were already enduring a torrid time amid the growing coronavirus outbreak – and then the oil price plunged, as the prospect of a dispute between Saudi Arabia and Russia loomed. In the US, the major stock indices fell so fast and so steeply that they triggered an automatic ‘circuit breaker’, suspending trading for 15 minutes.
Retail charity bond
Matures in 2030
The Alnwick Garden Trust has announced the launch of a retail charity bond, which will pay a fixed rate of interest of 5 per cent per year and mature in 2030. The first coupon payment is due on 27 September. The total issued size (including any retained bonds) is expected to be between £10m and £20m. The bonds do not have a credit rating. Since 2014, the bond issuer – Retail Charity Bonds plc – has also issued bonds on behalf of charities such as Golden Lane House and The Dolphin Square Charitable Foundation. The offer period is expected to close at noon on 20 March 2020.
NMC in debt mix-up
Beleaguered healthcare operator
The hits keep coming for NMC Health (NMC). The hospital operator has identified more than $2.7bn in debt facilities that had not been disclosed to or approved by the board. It said that it received an update on 10 March that its debt position was materially above the last reported figure of $2.1bn as of 30 June 2019 – and is currently estimated to be about $5bn. NMC was the subject of a short attack by Muddy Waters in December, and has since revealed confusion over the stake sizes of its major shareholders. The group’s chief executive was sacked last month, and its shares were suspended.
Storms and virus hit February spending
Avoiding the high street
Data from Barclaycard showed that the retail sector was hit by three in 10 Brits spending less during February because of Storms Ciara and Dennis, with more than half of those consumers delaying a shopping trip as a result. Amid the growing coronavirus outbreak, 28 per cent of UK adults reported that they were avoiding the high street and other busy areas. Department stores saw spending dip by 3.6 per cent, while restaurants endured a 6.4 per cent fall. Overall, consumer spending grew by 2.2 per cent year on year, bolstered by digital subscriptions and takeaways.
Mortgage holiday
Banks offer relief
Fewer people may be choosing to go on holiday right now, but they might be able to get a break from their mortgage. Royal Bank of Scotland (RBS) will allow people affected by the coronavirus outbreak to defer their mortgage and loan repayments for up to three months and temporarily increase their credit card limits. Rivals Lloyds Banking Group (LLOY) and TSB are offering similar relief. The move is designed to stem a potential wave of defaults should the epidemic become more serious, but it remains unclear how this would impact consumers’ credit scores. It follows Italy suspending all mortgage payments as it imposes a nationwide lockdown.
Risers and fallers (%)
| SIRIUS MINERALS | +17.35 |
| CARR'S GROUP | +5.51 |
| ULTRA ELECTRONICS HDG. | +5.35 |
| DIALIGHT | +4.76 |
| TESCO | +2.98 |
| PREMIER OIL | -70.77 |
| CAPITA | -59.52 |
| INTU PROPERTIES | -52.99 |
| TULLOW OIL | -49.8 |
| CAIRN ENERGY | -47.63 |
Week to 10 March 2020
Insurance broker tie-up
$30bn megamerger
Aon (US:AON) is set to buy Willis Towers Watson (US:WLTW) in a deal that will see the world’s second and third largest insurance brokers join forces. If the proposed $30bn (£23bn) merger passes antitrust scrutiny, Aon shareholders will hold a 63 per cent stake in the enlarged group. Should the deal fall through, Aon would be obliged to pay Willis a $1bn fee. The combined entity would usurp current top player Marsh & McLennan (US:MHM), which probably thought it had cemented its leading position after acquiring Jardine Lloyd Thompson Group for £4.3bn last year. This is the latest wave of consolidation among insurance brokers amid the low interest rate environment and squeeze on premiums.
Empty skies?
Aviation woes continue
As coronavirus continues its journey around the globe, airlines are struggling amid weak passenger demand and travel restrictions. Embattled low-cost carrier Norwegian Air Shuttle (Nor:NAS) has announced it is cancelling 3,000 flights across its network until mid-June while Qantas (Aus:QAN) is reducing capacity by almost a quarter for the next six months. Cathay Pacific (HK:0293) is expecting to incur a “substantial loss” in the first half of this year. But airlines are facing an additional dilemma – if they choose to operate fewer flights, they may lose their take-off and landing slots at major hubs. The European Commission is now looking to relax its rules to stop so-called “ghost flights”.
