As a result of recent regulatory developments in the European Union, particularly the Market Abuse Regulation, the Cayman Islands Stock Exchange (the “CSX”) has experienced a surge in listings. A majority of these listings relate to standard publicly issued debt, but many are much more bespoke and the CSX has quickly garnered a reputation as being the international exchange of choice for these listings.

The CSX acknowledges and understands the practical and commercial issues arising in connection with a proposal to list debt issued in a bespoke, private or commercially sensitive transaction. This advisory provides illustrative examples of how the CSX takes a proactive approach to bespoke listings.

What are the Obstacles to Listing Bespoke Debt?

The listing rules of most exchanges are designed to broadly facilitate the general array of debt listings possible, but primarily such rules are designed for the listing of public debt issued pursuant to an offering document that contains extensive disclosure for the benefit of prospective investors. Fortunately, the listing rules of the CSX (the “CSX Listing Rules”) have rules that are only applicable to “specialist debt securities” and “corporate and sovereign debt securities”, which can facilitate the listing of more bespoke securities by way of granting exemptions/ derogations.

Bespoke transactions include deals other than conventional public debt issuances, including, but not limited to:

  • intra-group restructurings, including debt issued to a number of related parties; or
  • the issue of loan participating notes, where there is some sensitivity in relation to the disclosure of information on the underlying obligor/ borrower; or
  • aircraft ABS/Leasing transactions where the disclosure of commercially sensitive information (such as details on underlying aircraft leases) could put the sponsor at a competitive disadvantage; or
  • transactions where an offering document was not necessary to conclude the transaction but where a “technical” listing would be beneficial to one or more of the transaction parties.

Similar to the listing rules of other exchanges, the CSX Listing Rules are predicated upon adequate disclosure being supplied to investors. The CSX must be satisfied that investors will be able to obtain the necessary information on the assets underlying the debt/ note issuance to enable them to form a reasonable opinion as to the value of such assets. The primary obstacle to listing more esoteric transactions is reconciling the applicable disclosure requirements with the disclosure sensitivities inherent in transactions of a bespoke nature.

Kevin C. Butler

Partner, Head of Cayman Islands Office

Cayman Islands

Matthew Stocker

Partner, Head of Cayman Corporate Practice

Cayman Islands

Stay current with our latest legal insights and subscribe today