Covid-19 (Coronavirus): How We See It (Chapter 2)
THE CHALLENGE CONTINUES: NO END IN SIGHT, YET
Further to our previous update, and given the unprecedented and fast-moving nature of Covid-19, we wanted to share with our clients and friends further insights into what we are seeing from within the industry.
Please note that these are based on conversations and communications with a selection of managers (located predominantly in the North-East U.S., across a range of strategies and asset and personnel size) over the past couple weeks. Risk continues to vary significantly by location.
EMPLOYEE SAFETY CONTINUES TO BE PARAMOUNT
We carried out a survey of between 20 and 25 mangers over the course of the last few days, across a selection of strategies and asset sizes on (a) NAVs/pricing and (b) investor interaction during this time of extreme volatility. We have set out the results below:
EFFECTS ON PRICING
- Approximately 75% of managers had some concerns around pricing for February and/or March. This was due mostly to significant illiquidity in certain assets relative to previous periods
- Approximately 25% of managers had considered, or are considering, over-riding the administrator for some part of their February/March NAV (breakdown; 75% credit, 20% derivatives, 5% equities in markets that have been suspended or delisted)
- 90% of the managers considering this had not previously overridden an admin mark
- 100% of managers reported materially increased IR activity
- 75% of managers reported a request for increased performance updates
- Of those, all have agreed to provide at least a weekly update
- 30% of managers reported requests for specialized information or reinforcement in writing of certain rights (mostly due to interpretations of side letter covenants)
It is important in times of stress that managers are actively communicating with key stakeholders to their funds, including investors and counter-parties and are being proactive in seeking advice from legal counsel and governing bodies where necessary.
DMS’ RESPONSE TO COVID-19 (CORONAVIRUS)
DMS continues to stay up to date with the latest Covid-19 (Coronavirus) developments and is following the guidelines provided by the World Health Organisation (WHO). During this time, the health and well-being of our staff, their families and our clients is our priority. The global DMS team is now working remotely and we are grateful for the hard work of our staff who have made this a seamless transition.