December 6, 2021

Listing Loan Participating Notes in the Cayman Islands

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Walkers GlobalFrom Walkers 19 February 2014

Given a recent upsurge in both the instructions and general inquiries we have received in connection with listing loan participating notes (“LPNs”) on the Cayman

Islands Stock Exchange (the “CSX”), this advisory provides you with some of the material details you will need to know before embarking on such a listing. The primary structures  involving LPNs include transactions where:

»   a bank originates a loan and then sells that loan to a special purpose  vehicle which issues LPNs to finance the acquisition of the loan;

»   an orphan special purpose vehicle is established to issue LPNs in the marketplace for the sole purpose of financing a loan to be made directly by the special purpose  vehicle to the underlying obligor/borrower;

»   a bank  originates  a loan and  then  grants  a participation  to a special purpose  vehicle (often  a Cayman  Islands trust,  in the  context  of Latin American

financings), the acquisition of that participation  being funded  by the issuance of notes in the capital markets. In each structure,  cashflows referable to the loan (or participation) are used to make payments  on the LPNs.

CSX Listing Rules

Similar to the listing rules of other  exchanges, the CSX listing rules (the “Listing Rules”) do not contain  prescribed  rules for the listing of LPNs. Fortunately, the Listing Rules applicable to “specialist debt securities” and “corporate and sovereign debt securities” are sufficiently flexible to accommodate the listing of LPNs. It is important to consider the relevant Listing Rules and to identify early on which, if any, may cause an issue in terms of disclosure or otherwise;  these should then be discussed in advance with the CSX.

In addition to customary information  about  the issuer, the Listing Rules require that certain additional information  on the issuer be disclosed and included in the listing document, including but not limited to: (i) financial information;  (ii) details about  the issuer (including the nature  of its business activities, its group (if any) and its directors); and (iii) the provisions of material contracts entered into by the issuer and confirmation as to where these documents will be available for inspection.

The Listing Rules also provide, among  other things, that the CSX must be satisfied that investors will be able to obtain the necessary information on the assets underlying the note issuance (being the underlying loan in the context of a listing of LPNs) to enable them to form a reasonable opinion as to the value of such assets and this invariably entails disclosing information  in relation to the borrower  which would include satisfactory financial and other information  including a description of the borrower’s credit quality.


The CSX has significant experience listing LPNs and, in our experience,  is quite flexible and responsive.  We have always found the CSX to be willing to work with prospective  issuers who  have concerns  about  disclosing certain  sensitive information,  provided  there  are sound  reasons  for those  concerns  and  that acceptable alternative approaches are proposed.  If an issuer is already listed or has debt  listed on another recognised  exchange, the CSX can permit certain derogations from the Listing Rules or permit the issuer to incorporate into the listing document certain information  by reference.  Generally the CSX will also be  satisfied with an issuer level responsibility statement only, as opposed to requiring such a statement from the borrower  as well.

The Listing Rules are predicated upon  disclosure being sufficient for investors, as described  above,  however  in a typical transaction involving LPNs, there  is often a degree  of sensitivity as regards disclosing certain information,  particularly in relation to the borrower.   To ensure investors are provided with, or are in a position to obtain,  the necessary information  to allow them to determine whether they should invest in the LPNs and to ensure compliance with the Listing Rules, we have agreed  a number  of solutions with the CSX in circumstances  where  disclosure requirements of the Listing Rules were causing problems  for transaction parties. Some illustrative examples follow:

»   in a transaction in which certain information  in relation to the borrower  was extremely sensitive it was agreed  with the CSX that such information  could be omitted  if the  issuer undertook to provide investors with further  details on such commercially sensitive matters  on their signing a confidentiality agreement. This allowed the client to obtain the required listing without having to disclose commercially sensitive information generally, which would have allowed persons other than investors (such as competitors of the borrower) access to this valuable information;

»   as a means to supplement the limited information  contained in the offering document in relation to the borrower  and the asset backing the LPNs (being the loan), we agreed  with the CSX to include the loan agreement as an exhibit to the relevant listing document which meant  that it was unnecessary  to prepare  a summary of the provisions of the document, saved time and costs and provided a pragmatic  solution to a time-sensitive situation; and

»   in a situation in which detailed  on-going  financial information  would be required by investors in relation to the borrower,  we agreed  with the CSX that the issuer would undertake in the listing document to disclose quarterly and annual financial statements of the borrower (and guarantor if any) to investors on request.  This approach avoided the general public disclosure of such sensitive information to those who were not concerned by it and also reduced the on-going  administrative obligations of the issuer.


The CSX is approachable, responsive (the reviewers generally provide comments on documentation submitted within 2-3 days) and will work to reasonable deadlines  to the extent  possible.  In our experience  the CSX is also proactive and will consider the practical problems  certain Listing Rules may create  and whether alternative approaches may be acceptable.

Walkers’ Role

Walkers supports  onshore  counsel and liaises with the CSX, as required,  to ensure  that  the LPN offering document is in compliance  with the Listing Rules. Alternatively, if the LPNs are issued without  the prior engagement of Walkers, we prepare  or support  onshore counsel in the preparation of a compliant listing document and are always able to suggest  solutions or explore alternative approaches with the CSX where concerns arise.  We have extremely good working relationships  with and access to the CSX and liaise directly with the CSX during the listing process.  We also handle  the preparation and submission of the ancillary application documents required by the CSX

Walkers’ Listing Services

In addition to listing LPNs, our listing team has significant experience listing equity and debt of other types on the CSX. Our team draws its membership  and expertise from our market-leading banking,  structured products  and capital markets  practices,  which means  that  they are fully conversant  with the various structures  and products  employed  in structured debt  issuances. The team  is also  comfortable analysing and assessing the financial assets  underlying such transactions, such as bilateral/syndicated loans and funded  or unfunded participations.

Our listing team comprises individuals based in each of our Cayman Islands, Ireland and Jersey offices who assist and advise in relation to listings by companies and issuers from a variety of different jurisdictions.

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