Leveraging Corporate Assets
Cayman’s experienced, top-class law firms specialise in capital markets and structured finance transactions for a global client base of institutional clients, and is a leading global provider of such services. The typical structured financed transaction involves a debt issue made by a Cayman Islands corporation, trust, or partnership known as a special purpose vehicle (SPV) which will then acquire the underlying assets from the promoting financial institution.
This allows the financial characteristics of those underlying assets to be converted into readily transferable marketable debt instruments issued by the SPV, which may comprise notes or bonds and which may be rated and listed. Acceptance of such issues was established beyond doubt in the marketplace when debt issues by Cayman Islands SPVs first obtained Triple-A ratings from the rating agencies. The English courts have also reviewed the Cayman debt - issuing vehicle and concluded the structure withstands scrutiny.
Financing arrangements undertaken by SPVs encompass everything from the simple capital markets euro paper issues, re-packagings, aircraft and ship financing, to more complex securitised transactions involving acquisition by the SPV of real property mortgages, credit card or other receivables, finance leases or indeed interests in mutual funds. In short, any financial or other asset that provides an income stream may be acquired by an SPV.
Cayman Islands law has facilitated the treatment of the SPV as a bankruptcy- remote entity specifically by the use of the charitable purpose trust, which is well-recognised in the financial markets in London, New York, and Tokyo, or the purpose trust which is formed under Cayman’s STAR legislation.
In the past, Cayman SPVs listed their securities on one or more foreign exchanges. That changed with the introduction of the CSX. The listing rules for the CSX were the first on any exchange to be specifically tailored to facilitate the listing of securities of mutual funds and SPVs.
Last Updated: 2005-06-07