The Cayman Islands remains the top choice of domicile for US CLO Managers when establishing their issuer vehicles given Cayman’s reputation as a sophisticated, creditor friendly jurisdiction.
The Cayman Islands remains the top choice of domicile for US CLO managers when establishing issuer vehicles, due to Cayman’s reputation as a sophisticated, creditor friendly jurisdiction. CLOs securitise assets, typically leveraged loans, by pooling them together and paying out income and principal repayments from the pool to investors. These investors buy tranches of debt or equity with specific seniority and pay-out structures, hence taking different degrees of risk. CLO SPVs will generally appoint a collateral manager responsible for managing the pool of loans and any other assets in the portfolio with a view to delivering returns for investors in a manner consistent with the terms of offering.
Cayman’s removal from the EU AML list in February of 2024 has seen the market move back to Cayman as the jurisdiction of choice for issuer vehicles - excellent news for the jurisdiction. In addition, there has been a flurry of refinancing and resets of earlier deals due to market conditions, highlighting the appetite amongst investors for CLO paper. Despite the current challenges in the market and some slow-down around April 2025, not least owing to ongoing war and prevailing US trade policy, CLO issuance continues to be robust, with many indications that this will continue. In fact, the market continues to see more innovation and a convergence with the private credit market.
Given its status as a recognised exchange, the Cayman Islands Stock Exchange is also a popular choice for managers should investors require that the notes be listed.
