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Our briefing for Tuesday March 2, 2021:
Mar 2, 2021 3:56:39 PM
- In the United States, the Senate could take up the COVID-19 relief bill that was passed in the House of Representatives last week as early as Wednesday. The version of the bill passed in the House would pay for vaccines and medical supplies, send a new round of emergency financial aid to households, small businesses, state and local governments, as well as $1,400 direct payments to individuals. However, with the relief bill expected to hit roadblocks in the Senate divided practically right down the middle with little wiggle room, some lawmakers are trying to inject their own pet projects. For instance, Senator Angus King, an independent who aligns with Democrats, has been pushing for billions of dollars to expand high-speed broadband service in rural areas – an idea that could attract Republican support.
- In what should come as a surprise to no one, official data from Statistics Canada showed the country’s economy shrunk by 5.4% in 2020 – the worst year for Canada’s economic output since record keeping began. The data agency did say Canada’s GDP grew by 2.3% in the last three months of 2020 but couldn’t offset the plunge due to the shutdown of large parts of the economy in March and April during the first wave of the coronavirus pandemic. For comparison purposes, Canada’s economy contracted almost twice as much as the United States did during the pandemic in 2020, despite seeing far fewer virus cases per capita.
- In the United Kingdom, the head of immunization for Public Health England (PHE), along with others in the scientific community said inoculations are working “better than any of us could have imagined.” During an interview with a British radio station, Dr. Mary Ramsay, head of immunization at PHE, said while they don’t know how long vaccinations may achieve halting community transmission over time, “there’s really very good signs that is going to at least reduce infection rates across the population, and hopefully… prevent people passing it on almost completely if they’ve been vaccinated fully.”
- Multiple media reports are stating Germany and France are facing mounting pressure to come up with creative solutions to get the AstraZeneca COVID-19 vaccine into the arms of its citizens. On Monday, France’s medical regulator reversed its decision on advising not to use the AstraZeneca inoculation on those over the age of 65, and Germany’s vaccination committee is under increasing pressure to follow suit to avoid a pile-up of unused doses in the coming weeks. According to The Guardian, two-thirds of the 1.4 million delivered doses of the AstraZeneca vaccine to Germany remain in storage.
- In Brazil, hospital ICUs are reaching their capacity, causing state officials to beg the government for stricter lockdown measures to reduce COVID-19 transmission. Last week, the Oswaldo Cruz Foundation (Fiocruz), a Brazilian Ministry of Health research institution, said the ICU occupancy rates are the worst since the start of the pandemic. Eighteen of Brazil’s 26 states have ICU’s at over 80% capacity, and nine of those are at the edge of collapse with over 90%. Health Minister Eduardo Pazuello has acknowledged the crisis, stating “the mutated virus has three times more contamination capacity, and the speed can surprise governors in terms of structure and support. This is the reality we have today in Brazil.”
- China plans to inoculate 40% of its population with COVID-19 vaccines by the end of June, according to a respiratory disease expert in the country. While at first glance, 40% of a country’s population doesn’t seem like an overly daunting task – one must remember the population of China – 1.4 billion. Therefore, 40% represents roughly 548 million people. This goal now seems overly ambitious, especially considering that same respiratory disease expert speaking at a panel on Monday revealed China has only vaccinated about 3.56% of its population – roughly 51 million people.
Covid-19 – Due Diligence And Asset Management
Data Extortion Ransomware Attacks on Financial Sector up 350 Per Cent During Covid-19 Pandemic
Brief : The global Covid-19 pandemic has disrupted the cybersecurity landscape, with ransomware seeing some of the largest pivots in attacker strategy, leaving organisations across sectors – including finance – vulnerable. Data from the CrowdStrike Intelligence team reveals a surge in ransomware attacks during the pandemic, with data extortion becoming the most used attack method for all sectors – with 1,430 incidents reported globally in 2020. The financial sector was one of the most targeted by cybercriminals in 2020 during the Covid-19 pandemic at a time when rapid shifts in working practices left organisations vulnerable. In the first emergency phase of the pandemic in Q2 2020, ransomware attacks on financial organisations using data extortion techniques were up 417 per cent compared to Q1. The sector reported 31 attacks between March and May alone.
Polar Fund Manager Guy Rushton Took his Own Life Following Extreme Stress
Brief: Polar Capital fund manager Guy Rushton took his own life in May last year having been “uncertain about the future” and “extremely stressed” about his health, the pressures of work and the dwindling size of his fund, a coroner’s court has heard. Rushton, 36, was found dead in a barn near his home in Wiltshire shortly after he went missing on 22 May, 2020. Two weeks before his death, he had been discharged from a psychiatric hospital and had been prescribed antidepressants following a previous suicide attempt. His widow Alannah Rushton told Wiltshire and Swindon assistant coroner Ian Singleton that the manager of the Polar Capital UK Absolute Return fund had “experienced high stress due to a number of factors”, the Times reported. Rushton (pictured) had been diagnosed in October 2019 with high blood pressure which his family attributed to the stress of being sole manager of the fund and not feeling like he could take time off. The Polar Capital UK Absolute Return fund had been among the top-performers in the Investment Association Targeted Absolute Return sector, but its performance faltered during the coronavirus sell-off. It had held £472.17m at the time of its February factsheet but that had fallen to £292.2m by the time Polar decided to wind up the fund.
Saudi Wealth Fund May Close its Biggest-Ever Loan Deal This Week
Brief: Saudi Arabia’s sovereign wealth fund is set to close a deal for its biggest loan ever as soon as this week, according to people familiar with the matter. The Public Investment Fund is raising about $15 billion from a group of international banks to finance new investments, the people said, asking not to be identified as the information is private. The final bank group participating in the facility is still being determined, and the size of the loan as well as the timing may change, they said. The PIF declined to comment. The wealth fund has more than doubled the size of the loan from an initial plan to raise up to $7 billion, Bloomberg reported last month. The $400 billion sovereign investor fund is tapping banks for its third loan so far, after borrowing $11 billion in its debut debt raising, and another $10 billion bridge facility in 2019 that it paid off last year. The fund has also received cash injections in the form of the $30 billion proceeds from the sale of shares in Saudi Aramco and a $40 billion transfer from the kingdom’s foreign reserves last year as it looked to finance an asset-buying spree during a slump in equity markets caused by the coronavirus.
Paper Source Sets Sale to Apollo-Backed Lender in Bankruptcy Bid
Brief: Paper Source Inc., the stationery and craft supplies chain, filed for bankruptcy with plans to sell itself after Covid-19 hampered expansion plans. The company intends to hand control of the business to an affiliate of MidCap Financial, a lending arm of Apollo Global Management, in exchange for debt forgiveness, court papers show. Paper Source owes about $103 million to lenders, including more than $55 million under a first-lien term loan. Paper Source, which has 158 stores across the U.S., expanded its reach last March when it bought about 30 stores from rival chain Papyrus out of bankruptcy. Less than three weeks later, Paper Source temporarily shut down all of its own stores, which generated more than 80% of sales in 2019. The company brought in gross sales of $104 million in 2020, down more than 30% from $153 million in 2019. In an attempt to preserve cash, Paper Source asked landlords for breaks on rent and stretched payment terms with vendors. Its rent concessions expired in January and vendors have threatened to stop doing business with the company, court papers show.
U.S. Airlines Remain in ‘Dire Straits,’ Need New Government Assistance
Brief: The head of a group representing major U.S. passenger airlines and a senior union official made the case to lawmakers on Tuesday for a third round of federal government assistance, according to testimony seen by Reuters. Since March 2020, Congress has awarded passenger and cargo airlines, airports and contractors nearly $90 billion in government assistance and low-cost loans, including two prior rounds of payroll assistance for U.S. passenger airlines totaling $40 billion. The $1.9 trillion COVID-19 relief package approved by the U.S. House last week includes another $14 billion for passenger airlines to keep workers on payrolls for an additional six months. It awaits action by the U.S. Senate. “We are still struggling and in dire straits,” Nick Calio, who heads Airlines for America, a trade group representing American Airlines, Delta Air Lines, United Airlines and others, said in testimony before the House Transportation and Infrastructure’s aviation subcommittee. “We were hoping it would be better by now.”
Real-Estate and Covid-19: Accelerating Trends
Brief: It is stating the obvious, but the pandemic has had a negative impact on real estate investment in Europe, with volumes for the year projected to be around 15-20% lower than in 2019, but still similar to 2016. This is only a superficial impact on the market and masks what are more profound changes. The cause of the reduction in real estate investment in Europe is not simply due to the restrictions in mobility that frustrate capital movements in what is now an increasingly internationalised industry, but may be more substantially attributed to the undermining of capital market confidence in occupier markets and not just in the short term, but more importantly into the long term. Although important, this isn’t just about confidence in occupier covenant strength as a result of the financial strain of the pandemic, but rather it is to do with the manner in which the pandemic is revolutionising the way in which we occupy real estate. Trends that were evident pre-pandemic are being accelerated both for good and bad. This might be most evident in the trauma being experienced in the retail sector and the contrasting exuberance of the industrial sector, but it also applies to the future use of offices and even the homes within which we live, indeed the entire built environment is being rethought.
