Sheba Raza of Conyers Dill & Pearman highlights the island’s strengths as an international finance centre
Bermuda’s reputation as an established international finance centre is well known. Its development over the last 60 years into a dominant (re)insurance venue, and the growing number of investment opportunities available to international investors capitalising on low interest rates, currency fluctuations and distressed assets, has led to the increased use of Bermuda vehicles across a wide spectrum of financing transactions.
Bermuda’s flexible, commercial legislative approach is supported by a clearly-developed, English-based legal system. Politically stable, tax-neutral, and an early adopter of international transparency and compliance standards, Bermuda creates a business-friendly environment, allowing companies to access high-quality capital, while protecting investor and creditor rights.
The use of Bermuda vehicles, with a recognised ownership and corporate governance structure, can often enhance opportunities for international companies to access capital efficiently. Bermuda’s support for the Lloyd’s of London and US insurance markets results in the issue of numerous investment-grade working capital, revolving and standby letter of credit facilities documented under English or New York law, supported by Bermuda law share and/or asset security. More recently, we have seen growth in multi-jurisdictional credit reinsurance facilities, which combine elements of fund financing (including pledges over capital calls) with traditional reinsurance structures.
Bermuda vehicles have also become a common feature of high-profile commercial property secured financings in the London market – particularly with respect to acquisitions by non-UK investors – raising significant sums at the development stage and at subsequent refinancing. The recent sale of The Leadenhall Building (aka ‘Cheesegrater’) for over £1bn is just one such example.
This article first appeared in the February 2018 issue of Legal Business.