A Q&A for Italian high yield issuers, focusing on capital markets implications and best practices.

Disclosure Requirements on COVID-19 Impact for High Yield Issuers -

Q: How should companies disclose the impact of the pandemic on their business?

The Market Abuse Regulation (MAR) applies to all issuers with financial instruments admitted to trading on a regulated market or multilateral trading facility (MTF) in the European Economic Area (such as the Luxembourg Euro MTF, Borsa Italiana ExtraMOT, or Euronext Dublin). MAR requires that issuers disclose, as soon as possible, all “inside information” that concerns the issuer or the relevant listed financial instruments, directly or indirectly. Inside information is defined as precise, non-public information that is likely to have a significant influence on the price of such financial instruments. On March 11, 2020, the European Securities and Markets Authority (ESMA) publicly recommended to issuers that they promptly disclose relevant material information concerning the impacts of COVID-19 on their financial condition, operations, or prospects in accordance with MAR. Therefore, issuers should consider whether the pandemic has had or would be expected to have an impact on their activity, performance, or outlook or the issuer’s ability to comply with covenants of listed debt instruments, as these developments could constitute inside information under MAR that would require disclosure.