Industry Updates
Volatile Markets and Repacks
30 Oct 2023
The correlation between repack issuance and volatile financial markets is well established as repacks can be a useful tool for investors to position themselves for heightened periods of risk. Repack notes can be issued both quickly and efficiently and while uncertainty and caution have dominated sentiment, repack issuance volumes have been particularly robust.
While the Cayman Islands remains the preeminent repack domicile with its traditionally strong Asian investor base, market data and feedback shows both Ireland and Luxembourg providing a positive experience for repack issuers and investors from within the EU. The broadening of the investor base for repacks is an encouraging development for the market, especially if there is potential for that to extend further to North America and the Middle East.
Heightened Volatility
In an analysis of issuance levels from the beginning of 2020 onwards, Maples Group data confirms the relationship between increased financial market volatility and demand for repacks. While economic uncertainty amid concerns over both sustained inflationary pressures and weak growth prospects has continued into 2023, the repack sector has still retained its allure, reinforcing the perception that investors utilise repacks to negotiate market stress and mitigate rising risks.
The activity in 2023 to date closely mirrors the market reaction after the first COVID-19 lockdowns of 2020 and is also reminiscent of the pattern observed during the financial crisis of 2007/8. The chart below[1] reflects the trend of monthly averages for Cayman Islands repack programmes during the last three years and demonstrates continued strong appetite for the product.
Innovation Over Time
'Tried and tested' through numerous market cycles, repack programmes have been refined over the years, notably with the introduction of more streamlined programme level legal documentation.Additionally, due to investor appetite and tightening market conditions, there has been an increased focus by arranging banks on exploring new markets and product differentiation, as well as creating greater efficiencies in existing programmes. The Maples Group works closely with leading international arranging banks and their onshore counsel to develop innovative solutions and certain distinguishing programme features, for example, to reduce the time between trade and issuance, address bespoke transaction requirements, or provide multi-jurisdictional coverage.
The Maples Group
As a major player in the global securitisation market, the Maples Group supports arranging banks and financial institutions globally, both in a fiduciary capacity and in regards to Cayman Islands, Irish, BVI, Luxembourg and Jersey law. Depending upon investor requirements, repack programmes can be arranged using vehicles incorporated in any of these jurisdictions. The Maples Group offers a comprehensive suite of fiduciary and charitable trust services to repack issuers from any of these jurisdictions, including Paying Agency, Accounting, Process Agent, Regulatory and Tax services.
The Maples Group also offers listing services to Cayman Islands repack issuers for both Programme and Series issuance from the Cayman Islands, Jersey, Ireland, United Kingdom and Luxembourg. Our legal and fiduciary teams have extensive familiarity with listings in many other jurisdictions and can also support repack issuers undertaking listings elsewhere. In addition to providing independent Cayman Islands, Luxembourg, Ireland or Jersey-based directors, depending on the domicile, the Maples Group offers registered office services and AML compliance services alongside other regulatory solutions from these jurisdictions, as well as Singapore, Hong Kong, Dubai and Delaware. This ensures the Maples Group can deliver on its commitment to provide our clients with a seamless offering of legal and fiduciary services encompassing the key aspects of operating an international repack programme, with maximum time-zone coverage.
Our specialised knowledge in this area continues to evolve to meet the requirements of repack market participants. With this expertise and a presence in the key repack jurisdictions, our professionals will ensure the repack issuers we support remain current and compliant with all legal and regulatory matters.
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[1] The chart shows trend line of issuances year-on-year. Issuance numbers are withheld due to confidentiality reasons.