Cayman Secures $ 330.4 Million Emergency Line of Credit

The Cayman Islands government will have access to a line of credit of up to $ 330.4 million to help deal with the economic fallout from the COVID-19 pandemic, Finance Minister Roy McTaggart announced today.

McTaggart, speaking at a government press briefing, said a consortium comprising four local banks has pledged to make the money available.

The government is paying $ 1.96 million to set up the line of credit, whether or not it has access.

Minister and Prime Minister Alden McLaughlin both stressed that the government has enough money in its coffers to deal with the current situation and that it is unlikely to need access to the line of credit. before at least the middle of next year.

McLaughlin said in a statement: “Although we have access to this line of credit, we do not anticipate needing to use it until the end of the second quarter of 2021. Indeed, it is a “much needed insurance policy” for the Cayman Islands. “

McTaggart said any use of the line of credit will convert to a long-term loan with the consortium.

Both the loan and the line of credit have an interest rate of 3.25% per annum, which, the minister pointed out, is the current prime rate offered by local banks.

The line of credit will expire in 18 months, the minister said. Any amount advanced and unpaid under the line of credit will be converted into a loan repayable with a fixed interest rate over 15 years.

“The terms submitted in the offer are very competitive,” the finance minister said, adding that this demonstrates that the Cayman Islands government is viewed as a “high quality sovereign, as evidenced by our Moody’s Aa3 rating.”

The government had requested a $ 500 million line of credit and issued a request for proposals in June.

McTaggart said credit for a possible $ 500 million loan would be presented to the Legislature at its next meeting and to the Foreign, Commonwealth and Development Office for approval before accessing any of the funds in the credit line. This credit would include the potential loan of $ 330 million under the consortium’s line of credit, as well as an additional loan of up to $ 170 million “if it becomes necessary,” he said.

In response to a question at the press conference, the minister said he believed the potential loan of $ 500 million should be “very, very sufficient” in the short to medium term and give the Caymans a “significant cushion. to keep going through the ordeals of COVID “. He added that the government would deplete its own reserves before borrowing available funds.

The Prime Minister told reporters that if COVID ceases to be a major international health problem and tourism in the Cayman Islands rebounds, the islands may not need to use the money at all. However, the government felt it was worth paying $ 1.96 million to ensure the funds were accessible “as a premium on this insurance policy.”

He added that because of the availability of much needed loans, Cayman didn’t “have to worry about cutting civil servants’ salaries, we don’t have to worry about stopping government plans, we don’t.” we don’t have to worry about where we are going to find the money to help businesses and vulnerable people in our community during this period ”.

McTaggart said any use of the funds “will meet needs resulting from the government’s lost revenue and increased spending related to COVID-19 – particularly increased government spending to support vulnerable people in our community and island business entities that have experienced financial difficulties. following the pandemic. “

The banks and the amounts they make available are:

• CIBC FirstCaribbean International Bank (Cayman) Limited: $ 94.3 million
• Butterfield Bank (Cayman) Limited: $ 117.26 million
• Cayman National Bank Ltd. : $ 94.3 million
• RBC Royal Bank (Cayman) Limited: $ 24.6 million

CIBC FirstCaribbean International Bank is the structuring and administrative agent for the consortium, while Butterfield and Republic Bank Limited and CIBC FirstCaribbean International Bank were the primary arrangers, McTaggart said.

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