Sidecars, cat bonds and other securitization vehicles have been something of an economic windfall for the Cayman Islands. A report from its financialoffice indicates that the British Dependency, located in the Caribbean about 240 kms (144 miles) south of Cuba, has “become one of the world’s top providers of structured finance transactions.”
“According to FactSet Global Filings, structured finance transactions in the Cayman Islands tripled in three years, from 837 in 2003 to 2,512 in 2006,” said the bulletin. “Cayman Islands financial service providers showcased this growth during the American Securitization Forum held in Las Vegas, Nevada, 28-31 January 2007.”
“The ASF Conference, which attracted more than 6,000 securities industry attendees, was an extremely valuable one from Cayman’s perspective,” noted Gerry Halischuk, Head of Business Development, Cayman Islands Stock Exchange. There was a great deal of interest in the CSX, which has become one of the leading offshore exchanges for the listing of various types of structured debt offerings, including CDOs, CLOs, and related programs.”
The report indicates that the Caymans (there are three main islands) are benefiting from the overall growth of the structured finance market, particularly the increase in collateralized debt obligation (CDO) securitizations. A recent report from JP Morgan released January 2007 said that CDO securitizations in 2006 were up 64 per cent from the year before.
“In addition to growth in structured finance, consistent growth in other areas of institutional investment such as funds, captive insurance and trusts are attributable to increasing recognition amongst global financial institutions of Cayman as a viable place to conduct business,” said the bulletin. “Cayman’s professional services infrastructure, its secure legal framework, its diverse and talented workforce, and its high standards of business integrity are major assets to Cayman’s global client base of financial institutions.”
The report cites comments by Sarah Cowell, partner and head of structured finance at KPMG in the Cayman Islands, that: “Cayman’s ‘edge’ appears to come from the ability of global securities firms to acquire constant access to a full range of experienced professionals who can assist with both the implementation of innovative approaches to the structuring and execution of transactions and ongoing servicing requirements.”
More information can be found at: www.caymanfinance.gov.ky.
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