Mar 2023
This digest outlines some of the significant legal work undertaken by Conyers on behalf of our clients around the world since the beginning of 2022. The year was challenging for many of our clients, with global uncertainty caused by a number of parallel and often related crises: the continuing legacy of COVID-19, significant worldwide inflation, a global monetary tightening cycle, a strong U.S. dollar, a war in Europe, energy supply issues and the ongoing turmoil in China’s property market.
The performance of debt and equity markets in 2022 is best described as skittish. Capital raising was tested by these factors, and the volatility led to a 45% drop in global IPO numbers and 61% decrease in capital raised from the year prior. In the Americas, volumes fell to a level not seen in 13 years, with values hitting a 20-year low. Market watchers predict similarly listless markets as issuers and investors watch and wait for these financing difficulties to wane. However, some encouraging developments can be seen in Asia as rising optimism over China’s economy promises a stronger 2023.
The remarkable levels of M&A activity in 2021 were slowed in 2022 by the same host of interdependent factors, and returned to pre-pandemic levels. Despite this, 2022 brought a healthy roster of 853 global deals, with an aggregate value of US $3.63 trillion. M&A activity among Conyers clients continued to reflect broader market trends, with the technology, media and telecommunications sector accounting for the lion’s share of deal activity.
The restructuring market continued its relatively quiet trend through 2022, but Conyers assisted in a number of successful restructurings of PRC-based property companies. As we look to 2023 we expect corporate restructuring, both in the North American and Asian markets, to increase and to remain strong into 2024. As far back as 2019, analysts talked about a looming wave of restructuring. It hasn’t happened yet — it has been put off because companies did not want to lock in losses when cheap money was available — but now money is expensive. We are forecasting an increase in restructurings in the first half of 2023.
Bermuda’s re/insurance industry fared well in spite of the macro headwinds, with a number of key group reorganisations, continued growth in the life sector, and strong performance in the catastrophe bond market. The Cayman Islands insurance industry also saw continued growth over the past year, reaching the highest number of licenced insurance entities since 2018: although final figures for the year had not been released at the time of writing, the jurisdiction was on track for a record-breaking year in registrations at the end of Q3.
It was an active year for Conyers, as well, in asset-based transactions, particularly in the shipping, aviation and oil and gas sectors. Bermuda is among the largest and most developed offshore jurisdictions for asset-backed securitisation transactions. In addition to container transactions, Bermuda plays a significant role in the aircraft and aircraft engines sector, the insurance industry (notably through catastrophe bonds and other insurance-linked securities) and other asset classes.
We hope this digest will be of interest to our legal colleagues, clients, and market watchers.