In this guide to lending and secured finance in Jersey, Carey Olsen lawyers Robin Smith and Laura Healy explore the following topics: guarantees; collateral security; financial assistance; withholding stamp and other taxes, notarial and other costs; judicial enforcement; bankruptcy proceedings; jurisdiction and waiver of immunity; and licensing.
Banking deposits in Jersey are on the rise (£139.2bn as at September 2019 according to the figures from the Jersey Financial Services Commission). The headquarters of a number of international banking organisations remain in Jersey and following the completion of post-Vickers ring-fencing, deploying balance sheet capital through lending products continues to be high on the agenda for some of these banks. That means, for most, seeking out more international rather than local deals.
The absence of significant European M&A activity has continued to depress the leveraged finance market, although the outlook for 2020 is stronger with considerable private equity dry powder available.
Brexit has influenced the lending activity in Jersey, but only to the extent that it has affected the cross-border deals which are led from the City. Jersey remains to a great extent a "no change" jurisdiction as it is not a member of the EU. The actual impact of Brexit is therefore only to be felt via the aftershocks emanating from the European economies.
Significantly, Jersey was given a clean bill of health on matters of beneficial ownership (UK Parliamentary Review and the Financial Action Task Force ("FATF")), tax practices (OECD), economic substance (ECOFIN) and is set to align itself with, the EU's 5th Anti Money Laundering Directive, clearly demonstrating a commitment to being a cooperative jurisdiction.
New fund formations have been steady and the financing of such funds through subscription facilities, NAV or hybrid products as well as GP leverage (whether by debt or equity remains an important part of the Jersey lending market.
The outlook for high-yield bonds is very positive going into Q1 2020.
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Article originally published on 30 April 2020The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.