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.
CLOs securitise assets, typically leveraged loans, by pooling them together and paying out income and principal repayments from the pool to note holders. CLO investors buy tranches of notes with specific seniority and pay-out structures, hence taking different degrees of risk.
The Cayman Islands Stock Exchange is also a popular choice for Managers should investors require that the notes be listed. In 2019 there were approximately 246 new deals that priced totalling $118 billion. In addition, there were refinancing transactions of approx. 90 CLOs with a value of over $40 billion. Despite the current challenges in the market worldwide CLO issuance continues to be robust with all indications that this will continue.