CAYMAN GOVERNMENT SECURES LINE OF CREDIT

George Town, Grand
Cayman:
The Minister for Finance and Economic Development, the Hon. Roy
McTaggart is pleased to confirm that the Government of the Cayman
Islands has awarded the provision of a stand-by line of credit (LoC)
to a consortium of local banks. In addition, any use of this LoC will
be converted to a long-term loan facility with the consortium. The
LoC is expected to close on or before 15 October,
2020.

The consortium is comprised of the following banks with each committing to provide the below amounts:

A total of US$403 million is being made available under the LoC and the same amount is available under the long-term loan facility.

CIBC
FirstCaribbean International Bank is the Structuring and
Administrative Agent for the consortium. Butterfield and Republic
Bank Limited acted alongside CIBC FirstCaribbean International Bank
as Lead Arrangers.

The
tendering process for the facilities commenced and concluded with,
respectively, the Ministry of Finance‘s Entity Procurement
Committee’s approval and the Public Procurement Committee’s
review and scrutiny.

The
Honourable Minister for Finance stated, “The terms submitted in the
bid are keenly competitive. These facilities demonstrate that the
Government of the Cayman Islands continues to be regarded as a
high-quality sovereign as is reflected in our Moody’s rating of
Aa3. The tender followed all required procurement guidelines. It is
very pleasing to me that we are seeing local commercial banks come
together and submit a single bid to the Government of the Cayman
Islands, thereby demonstrating their confidence in the Government and
the country as a whole. This is a win for Government and a win for
the people of the Cayman Islands.”

Premier
Hon. Alden McLaughlin said, “This Government’s strong fiscal
management, with past healthy annual surpluses, paying-down debt and
growing our reserves, meant we were in a good place economically and
financially before COVID-19. This has provided the necessary buffer
that we knew we would need one day. Because of our strong fiscal
position we are in a better place than most countries. Whilst we have
access to this line of credit, we do not expect to need to use it
before the end of Q2, 2021. In effect, this is a much needed
“insurance policy” for the Cayman Islands. I would like to thank
Minister McTaggart and his team for the stellar job in getting this
line of credit and the long-term loan facility successfully awarded
and soon to be in place.”

An
Appropriation for a possible CI$500 million borrowing will be
presented to the Legislative Assembly at its next Meeting and to the
Foreign, Commonwealth and Development Office for approval prior to
accessing any of the funds from the LoC. This Appropriation will
include the possible US$403 (CI$330) million loan under this line of
credit as well as provide the ability of Government to borrow an
additional sum up to CI$170 million, if it becomes necessary.

At
the expiration of the 18-month LoC, any amount advanced and unpaid
under the LoC will be converted to a 15-year, fixed interest rate
amortising loan. Both the LoC and the long-term loan are priced at
3.25% per annum – the current Prime Rate offered by local banks.
The cost to put the LoC and long-term loan facility in place will be
approximately US$2.4 million.

Any
use of the funds will address needs resulting from Government’s
loss of revenue and its increased expenditure related to COVID-19 –
particularly increased expenditure by Government to support the
vulnerable in our community and business entities across the Islands
that have experienced financial hardship as a result of the pandemic.