A process of redemption
Fallout from the sub-prime credit crisis, the Bernard Madoff affair and recent events in the banking and finance sector have had a severe impact on the hedge fund industry leaving many offshore funds facing substantial redemption requests with insufficient liquidity to meet them.
Aviation “be careful what you wish for”
In 2008, the industry lost US$5.2b as a result of the sudden increase in oil and jet-fuel prices and the bulk of the losses were sustained in the US where many airlines had insufficient hedging protection in place. Fuel accounted for 32 per cent of airlines’ operating costs in 2008, according to the International Air Transport Association forecast, published in February 2009.
Sleeping with an elephant
While one could speak generally of Cayman companies that do business in Cayman, we are finding the greatest impact of this in the liquidation of Cayman hedge funds, particularly in those instances where the investment management, administration and/or assets are in the United States.
How sound is the Cayman dollar?
The Cayman Island Monetary Authority operates a currency board to ensure adequate backing for the Cayman Islands currency and that enough paper currency and coin is available to meet the demands of the market. In 1971, the political leaders in Cayman and the UK decided that the Cayman Islands economy had grown sufficiently to support its own currency, through the use of a currency board and that such a currency would be in the political and economic interests of the Cayman Islands.
Bridge Finance Lending to Private Equity Funds in the Cayman Islands
Providing loan facilities to investment funds is certainly nothing new and it has been a lucrative business for a number of banks here in the Cayman Islands for many years. With single manager funds obtaining their finance at brokerage level, the primary market for Cayman banks are fund of fund vehicles (usually formed as Cayman Islands exempted companies) to which they provide both bridge and leverage finance.