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Industry Updates

COVID-19 Cayman Islands Update: Funds and Term ABS Loan Facility

07 Apr 2020

On 23 March 2020, the Federal Reserve announced that it is re-establishing the Term Asset-Backed Securities Loan Facility ("TALF") to facilitate the issuance of asset-backed securities ("ABS") on or after 23 March 2020.  As with the original TALF that was set up back in November 2008, the purpose of TALF is to encourage the issuance of ABS backed by consumer and small business loans.  This will in turn support US households, businesses and the US economy by promoting employment and stabilising the financial system during the current economic instability caused by COVID-19.

As with the original facility, Cayman Islands feeder funds can be set up to allow non-US and US tax exempt investors to provide capital to invest into eligible securities under the TALF program, and therefore provide investment opportunities and capital to support this critical part of the US market.

As with all Cayman Islands funds, they offer a well-understood and common vehicle for international investors with an ability to be incorporated quickly.  They can be provided in various legal forms depending on investor preference (exempt companies, LLCs and Exempted Limited Partnerships) with the backdrop of a well-known and respected court and legal system and an appropriate level of regulation for institutional investors along with a good level of corporate governance for investors.  Off balance sheet structured vehicles can also assist with any bankruptcy remote elements needed for risk and leverage purposes.

Further Information

If you need any further information with respect to the Maples Group's expertise and experience with TALF feeder funds and structured vehicles, please liaise with your usual Maples Group contact or one of the contacts listed below.

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