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Our briefing for Friday February 12, 2021:
Feb 12, 2021 3:52:46 PM
- In the United States, The New York Times and New York Post are reporting New York state Governor Andrew Cuomo’s top aide withheld nursing homes’ COVID-19 death toll for fear it would spark a federal investigation. “We were in a position where we weren’t sure if what we were going to give to the Department of Justice, or what we give to you guys, and what we start saying was going to be used against us and we weren’t sure if there was going to be an investigation,” said Melissa DeRosa, Secretary to the Governor, to Democratic lawmakers. The comments made by DeRosa come about two weeks after New York Attorney General Letitia James published a report saying the true death toll of nursing home residents between March and August of 2020 may be twice as high as the 6,400 officially reported.
- In Canada, new measures forcing air travellers to be on the hook for a hotel quarantine bill will take effect as of February 22nd. Prime Minister Justin Trudeau made the official announcement on Friday. Under the new rules, travellers returning to Canada will be required to take a COVID-19 test at the airport at their own expense. They will then be required to spend their first three days of their quarantine at a supervised hotel while awaiting their test results and pay for the stay, which is expected to cost upwards of $2,000. Travellers will be required to book their government-authorized hotel stay in advance starting February 18th.
- The United Kingdom’s reproduction rate for the coronavirus epidemic has dropped to its lowest levels since July. According to official government estimates published on Friday, the latest “R” number is between 0.7 and 0.9. What this means is that on average, every ten people infected with the coronavirus are passing it on to between seven and nine others. The last time the upper end of the range was below 1 was on July 31st, 2020. The figures mean Prime Minister Boris Johnson is forging ahead with his government’s plan to create a road map out of the UK lockdown, which he plans to unveil on February 22nd.
- Italy’s Mario Draghi has gathered enough support from Italian lawmakers to lead the country’s next government. Draghi was able to clear the last hurdle on Thursday when the majority of the leftist Five-Star movement opted to back the former chief of the European Central Bank. Draghi will now face confidence votes in Parliament next week and will present his Cabinet to the President on Friday. Gaining support might have been the easy part of Draghi’s job as once he becomes Prime Minister, he must lead Italy out of severe health and economic crises created by the coronavirus pandemic.
- Japan’s government is set to review next week an early lifting of the COVID-19 state of emergency covering Tokyo and several other regions. As of the right now, the state of emergency was scheduled to end on March 7th. About 1,300 cases were reported on Friday in Japan, the sixth consecutive day under 2,000 cases and significantly better than the single-day peak of 7,882 a little over a month ago. Elsewhere in the country, about 400,000 doses of the Pfizer vaccine arrived on Friday with a Japanese health panel recommending approval – the first COVID-19 vaccine to get that distinction. Inoculations, starting with health workers, is expected to begin next week.
- Australia’s second largest city – Melbourne – is entering its second lockdown to contain an outbreak of the UK strain of the coronavirus. The snap five-day lockdown was enforced by Victoria state Premier Daniel Andrews, which means 6.5 million residents must stay home except for essential shopping, care, exercise and work. The outbreak has spread from a quarantine hotel with the case count sitting at 19. The one thing that will continue is the Australian Open Grand Slam tennis tournament taking place in Melbourne and about to enter its second week. The event will continue without spectators. The sporting event is being treated as a workplace, meaning it can continue without crowds.
Covid-19 – Due Diligence And Asset Management
U.S. Says it’s Back at the Table to Help Global Economic Recovery
Brief : New U.S. President Joe Biden’s administration told allies on Friday it was re-engaging with them to help steer the global economy out of its worst slump since the Great Depression, a contrast with go-it-alone approach of Donald Trump. U.S. Treasury Secretary Janet Yellen told her peers from the Group of Seven rich nations that Washington was committed to multilateralism and “places a high priority on deepening our international engagement and strengthening our alliances”. Yellen spoke to the G7 in an online meeting, chaired by Britain, at which she called for continued fiscal support to secure the recovery, saying “the time to go big is now”. Britain said officials discussed giving help to workers and businesses hit by the pandemic while ensuring sustainability of public finances “in the long term”. As well as the United States and Britain, the G7 includes Japan, France, Germany, Italy and Canada.
Covid-Claim Investors Seek Windfall Over Denied Coverage
Brief: A growing market niche where investors profit from others’ legal troubles is getting a boost from Covid. Distressed-investing funds and litigation-finance boutiques are likely to be spoiled for choice after a landmark U.K. court ruling last month rejected pleas from insurers looking to dodge pandemic payouts. They’re looking to finance or buy denied Covid-19 insurance claims for policyholders without the means or stomach for taking their insurers to court. “This is going to be huge,” said Steve Cooklin, chief executive officer of London-based litigation funder Manolete Partners Plc, whose biggest shareholder is veteran distressed investor Jon Moulton. “It’s hard to say at this stage how big exactly this issue is, but it’s probably going to be in the hundreds of millions of pounds.” Insurers have warned that Covid-19 coverage claims could top as much as $100 billion –- potentially the industry’s largest loss in history. Business-interruption coverage -- which protects against losses when companies have to shut for a period of time -- has been one of the most costly and contentious policy lines in the pandemic. U.K. virus-related claims, including on business-interruption policies, could exceed $2 billion. For investors in a zero-yield world of spiraling stock prices, the insurance payout battles present opportunities that can be profitable regardless of how debt and equity markets perform -- they’re “uncorrelated,” in the jargon of the trade.
Ninety One’s Evans: Covid Has Accelerated UK Companies’ Sustainability Outcomes
Brief: Positive outcomes on sustainability issues from UK companies have been brought forward by three years as many firms prioritised employee and customer welfare through the peak of the coronavirus pandemic, Ninety One's Matt Evans has said. Companies in various sectors across the world were hit hard in H1 2020, as global lockdowns caused planes to be grounded as well as sporting, theatrical and musical events to be cancelled, leaving large swathes of the economy with zero revenue for months. Governments reacted by instituting schemes such as furlough in the UK, allowing companies to reduce their workforce without needing to fire people as the Government would pay up to 80% of their wages. All companies were able to access the furlough scheme, but Evans, who manages the £38m Ninety One UK Sustainable Equity fund, told Investment Week some were more introspective than others. Evans highlighted Dechra, a provider of veterinary pharmaceutical products, as an example of a firm that decided against taking furlough cash, instead promising to pay its employees itself even when they were unable to work. Since, Dechra has benefitted from the work-from-home trend as consumers spend more time with, and therefore money on, their pets.
White House Meets with Airline CEOs on COVID-19 Travel Issues
Brief: The chief executives of major U.S. airlines, including American Airlines, Southwest Airlines and United Airlines, met virtually with the White House’s COVID-19 response coordinator on Friday amid airline concerns that new restrictions could be imposed on domestic air travel. “We had a very positive, constructive conversation focused on our shared commitment to science-based policies as we work together to end the pandemic, restore air travel and lead our nation toward recovery,” Nick Calio, chief executive of the Airlines for America industry group, said in a statement. The White House, which declined to comment on the airline meeting, has a separate interagency meeting scheduled for later on Friday to discuss coronavirus issues and is not expected to endorse requiring negative COVID-19 tests before flights at this point, said people briefed on the matter, who spoke on condition of anonymity. The airline CEO meeting with coronavirus response coordinator Jeff Zients and other administration officials involved in COVID-19 issues came after airlines, aviation unions and other industry groups strongly objected to the possibility of requiring COVID-19 testing before boarding domestic flights.
DWS Scraps City of London Office Sale as Lockdown Saps Demand
Brief: DWS Group has abandoned plans to sell a City of London office building after bids fell short of its 145 million-pound ($200 million) asking price, the latest evidence of the pandemic eroding demand for all but the best new properties. The German asset manager majority-owned by Deutsche Bank AG has taken 85 King William Street off the market, and will now carry out a partial renovation, according to a DWS spokesman. The recent departure of some tenants from the building known as Capital House contributed to the low bids, according to people familiar with the matter, who asked not to be identified because the process is private. Capital House is “one of many strong core London office assets that DWS will continue to add value to through our active management strategies,” the DWS spokesman said, without commenting on the vacancies. An easing of coronavirus restrictions helped boost activity in London’s office market late last year, with deal volumes in line with the long-term average. But the latest lockdown, which has further delayed the return of workers to offices, has once again put a damper on sales, especially for properties that need modernizing.
Outsourced Lead Generation to Become the ‘New Norm’ for PE-Backed Businesses
Brief: Outsourcing the generation of leads and new business will become the ‘new norm’ as the pandemic eases, one leading digital marketing firm has predicted. Scottish headquartered 4icg Group, chaired by entrepreneur Brian Williamson, says it has experienced an increase in private equity backed businesses looking to retain its services because of the need to recover falling revenues and maintain equity value. Dr Williamson pointed towards American PE-backed software and tech companies who accelerate their growth by outsourcing lead generation from day one to build sales volume quickly – a business model which is moving across the Atlantic. Williamson says: “Business quickly had to deal with the immediate impact of the pandemic but now we’re seeing companies taking the steps to recalibrate in line with revisions to their medium and long-term strategies. “For PE backed businesses, generating leads quickly and in good volume from a limited sales budget is more important than ever. A total package per sales employee may be GBP75k per annum but delivering the volume from that is trickier than ever given the restrictions on movement. A remote sales force can be guilty of chasing rainbows right now in an effort to justify their existence.
