COVID-19 update on trends and developments for Debt Capital Markets

The economic forecast for the debt capital markets in Ireland during the next 12 months is considerably more positive than it has been since the COVID-19 outbreak escalated to become a global pandemic in the early months of 2020. 

We have seen a significant upturn in activity since the final quarter of last year and expect this positive trajectory to continue as the vaccine rollout continues to gather pace leading to greater certainty amongst market participants both domestically and internationally. As has been the case globally, the Irish economy has felt the impact of the COVID-19 pandemic and this has had ramifications in the debt capital markets, particularly residential mortgage backed securitisations. 

Since the outset of the pandemic, the Central Bank of Ireland (CBI) has focussed on protecting consumers and supporting individuals and firms experiencing financial difficulties due to the exceptional circumstances of COVID-19. The Banking & Payments Federation Ireland (BPFI) (which includes all the main Irish retails banks) supported the introduction of payment breaks for affected customers since March 2020 and, while the banking sector is not currently accepting applications for new COVID-19 payment breaks, they continue to actively engage with affected customers on a case-by-case basis to find workable solutions.

The Residential Tenancies Act 2021 was also recently signed into law to extend the applicability of the pandemic related protections initially implemented under the Planning and Development, and Residential Tenancies Act 2020. These protections include extended notice periods for lease terminations and the restriction of rent increases during stated emergency period. As at the date of writing, it is expected that these protections will stay in place until mid-July 2021.

The above measures were necessary to mitigate the significant consequences of the COVID-19 pandemic on the wider economy. However they have also, by their very nature, affected cash flows on RMBS deals as well as other related matters (such as enforcement procedures). More generally, we have also seen a number of waivers and amendments to structured finance transactions during the past twelve months as market participants deal with the financial challenges of the pandemic.

For further information in relation to this topic, please contact Peter Walker, Sinéad O'Connor, Jack Sheehy, Finance Partners, or any member of ALG’s Capital Markets Debt team.

Date published: 16 June 2021