Repackaging transactions, or “Repacks” as they are more commonly known, have been around in one form or another since the early 1980s. Repacks follow well-established, “tried and tested” structures that have demonstrated great resilience through multiple market cycles. Their relative simplicity has been one of their continuing attractions and has helped these structures perform well during periods of economic downturn and market stress, ensuring they continue to be popular with investors.
In its most basic form, a Repack structure involves the establishment of an SPV issuer (the Issuer) to acquire an underlying asset, and this asset is then used as collateral to underwrite the issuance by the Issuer of a new note (or other form of debt security) to an investor. This two-step process allows the structuring bank to change the nature of the security being offered, or “repackage” it, to remove any features that may be undesirable to investors, and/or to include additional features that may make the security more attractive to investors.
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10 Things You Need To Know About…Structuring a repackaging transaction using a Cayman Islands SPV