The Cayman Islands: Different Structures for a Challenging Regulatory Environment

Securitisation is an essential part of the post financial melt-down environment, and it is an essential component for the re-establishment of lending in the global economy. This is recognized at all levels. Academics recognize its significance, and in initiating the TARP Programme to support these types of transactions there is also recognition at the Federal Government level in the United States. Due to capital constraints, banks won't be able to sustain lending at anything like pre-Credit Crunch levels, unless there is a live and active primary Securitisation market.

A Collateralised Loan Obligation ("CLO") is a particular type of Securitisation that packages loans made to large corporate credits. It should be noted that none of the Collateralised Loan Obligations ("CLO's") that have been issued in the last decade ended up defaulting during the credit crisis, despite some tranches trading as low as 60 cents in the Dollar in the midst of the crisis. CLO's are now