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ARTICLE · 07 JUNE 2022

Bermuda CLOs: Top 3 Tips

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Following the inclusion in February 2022 of the Cayman Islands on the European Union's AML list, managers and investors have been turning to Bermuda as an alternative jurisdiction...

BermudaFinance and Banking
Adam Bathgate
Adam Bathgate
Nathalie West
Nathalie West
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Bermuda and Collateralized Loan Obligations ("CLOs")

Following the inclusion in February 2022 of the Cayman Islands on the European Union's AML list, managers and investors have been turning to Bermuda as an alternative jurisdiction in which to incorporate issuers of collateralised loan obligations where the investor base is anticipated to include those based in the EU. In fact, Bermuda has emerged as one of the two major jurisdictions of choice for US CLO managers seeking to market deals to EU investors and in the first quarter of 2022 the Bermuda team has seen a number of new incorporations and existing structures in warehouse phase migrating to Bermuda.

The jurisdiction's advantages for managers and investors are numerous: tax neutrality, the stability of its legal and political system, its compliance with international standards including FATCA/CRS and the familiarity of rating agencies with Bermuda structures established through the jurisdiction's status as

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