FUNDed DATA INSIGHTS
Half Year of Deal Data from Across Our Global Team
GLOBAL
Market Reviews
RATINGS ON OUR RADAR
Essential Insights into Rating Methodologies Used Across the Fund Finance Market
TABLE OF CONTENTS
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In this edition, we feature:
Opening Remarks from Tina Meigh
US Fund Finance Market: 2025 Mid-Year Overview and Trends
European Fund Finance in 2025: Key Developments and Market Perspectives
Capital Call Securitisation in Luxembourg
Ratings on Our Radar
Unlocking Fund Finance Opportunities: The Impact of 2025 Amendments to Jersey Private Funds
Bankruptcy Remote Cayman Islands SPEs in Fund Financing Transactions
Japanese Megabanks Cement Position in US Syndicated Loan Market
The Maples Group is delighted to present our September 2025 edition of FUNDed.
Matthew St-Amour
Robin Gibb
US Fund Finance Market: 2025 Mid-Year Overview and Trends
Subscription Lines vs Net Asset Value
Subscription lines continue to dominate our practice, accounting for approximately 71% of new deals closed in the first half of this year, while net asset value financings ("NAVs") represent 16%. This marks a relative decline in NAVs compared to 2024, when they comprised 25% of our US fund finance practice. Notably, this shift is primarily attributable to a surge in subscription line activity, rather than a material decrease in the number of NAV transactions. Indeed, we continue to see new money and clients – typically repeat users – incorporate NAVs as part of their strategic toolkit, and all indicators point towards future growth (at least in absolute terms) of NAVs.
Hybrid facilities remain present but have not gained significant traction, constituting around 4% of our US practice year to date. This is broadly in line with our data for 2024.
Despite a series of external shocks, the US fund finance market has demonstrated remarkable resilience in 2025. Activity levels remain robust, with our Cayman Islands office alone closing over 120 new financings in the first half of the year. This market update provides high-level insights into current trends and deal structures, as well as offering some predictions for the remainder of 2025 and beyond.
Subscription lines NAV facilities Other (including hybrids) (H1 2025 – Closed deals only)
Supply Side
Traditional banks continue to dominate the subscription line market, while non-bank lenders are more active in the NAV space, accounting for approximately 15% of our closed NAV deals in the first half of this year. While this is broadly consistent with our 2024 figures, it remains to be seen whether there will be any increase in non-bank lender participation during the rest of 2025. In our experience, non-bank lenders continue to play a valuable role, bringing deep sector experience, flexibility in terms, and an enviable speed of execution to successfully complete deals. The fundamentals all point to increased participation, but other factors may be preventing their full potential from being realised.
A notable development in 2025 is the increasing interest from insurance companies in fund finance. Although this trend is still at an early stage, we have seen various structures being explored to facilitate regulatory compliance and unlock insurer participation. This is an exciting development that we will be monitoring closely for the remainder of 2025 and into the new year.
Amend and Extend
We continue to see a steady flow of subscription line amendments, having worked on over 160 closed subscription line amendments in the first half of this year. According to our data, approximately 61% of such amendments featured a term extension, making this the most common reason for amendment. Approximately 41% featured a margin decrease, indicating that borrowers are continuing to benefit from more favourable market dynamics.
The number of NAV amendments remains significantly lower than the number of subscription line amendments. This is to be expected, given the smaller pool of NAV deals, but it also reflects the different dynamics at play. For example, subscription lines typically have a shorter tenor and therefore require regular extension. The subscription line market is also highly competitive and more commoditised than the NAV market. Both are factors that lead market participants to periodically optimise deal economics and other terms by taking advantage of the latest market developments.
Subscription line amendments vs NAV amendments (H1 2025 – Closed deals only)
SUBSCRIPTION LINE AMENDMENTS
NAV FACILITY AMENDMENTS
The adoption of bankruptcy remote structures in fund finance remains a key trend in 2025.
Bankruptcy Remote Structures
The adoption of bankruptcy remote structures in fund finance remains a key trend in 2025, with an upward trajectory. While not yet standard for NAV deals, these structures are increasingly being utilised by managers to optimise risk, credit quality, legal certainty and pricing. The number of transactions across the first half of 2025 are up on the same period for 2024, and anecdotal evidence from our team is that there has been a further uptick in these transactions across the mid-point of 2025. As securitisation and other technologies from adjacent finance sectors are increasingly adopted, we anticipate further growth in the use of these important structures.
The Cayman Islands continues to be particularly wellsuited to bankruptcy remote transactions, drawing on expertise and technology used in securitisation and asset finance structures. Our legal and fiduciary teams remain at the forefront of these developments, advising on the most complex transactions in the market.
Outlook for the Remainder of 2025 and Beyond
While further challenges may arise in 2025, we anticipate that the fund finance market will remain resilient and close the year strongly. The prospect of interest rate cuts may further boost demand across the fund finance market, at least in the near term, but we expect activity to remain strong regardless of macroeconomic conditions.
As in previous years, we continue to monitor the evolution of the NAV market, both in terms of deal volume and transaction structures. We expect NAVs to remain a key tool for managers, particularly in an environment where M&A activity is subdued and exit opportunities are limited.
As noted at the outset, we have seen a very strong year for subscription lines, particularly in terms of new deals. Given the current fundraising environment, which continues to be challenging for some managers, this is perhaps the most remarkable feature of 2025 – and bodes exceptionally well for 2026.
For more information, please contact Matthew St-Amour, Robin Gibb or your usual Maples Group contacts and we would be delighted to discuss further with you.
Matthew St-Amour
+1 345 814 4468
matthew.st-amour@maples.com
Robin Gibb
+1 345 814 5569 robin.gibb@maples.com
European Fund Finance in 2025: Key Developments and Market Perspectives
Vanessa Lawlor
It has been a very active year to date for the European fund finance market. The reduction of interest rates has certainly contributed to this together with the continuing demand by managers for liquidity.
Subscription Lines
Similar to the US market, we have seen an increase in the number of new subscription line facilities this year across all our European offices, with these facilities accounting for approximately 80% of our new fund finance deals so far this year. The majority of these sub lines have been financed by traditional bank lenders and are committed facilities for one-to-two-year terms. Approximately 66% have included an accordion or increased facility option with one third including an extension option, thus demonstrating the increasing flexibility of this product in the market.
Refinancing and amendments to existing capital call facilities have also continued to be a strong theme in 2025 so far, with extension to the term being the reason for approximately 70% of the amendments across our European offices. Increases and / or decreases to facility size and margin rates make up the balance of the amendments to date.
New Sub Line Deals in 2025 (European Market)
Sub Lines NAVs
Subscription line facilities account for approximately 80% of our new fund finance deals so far this year, with the majority financed by traditional bank lenders.
NAV Facilities
We have seen a steady flow of NAV financings in Europe this year, continuing this trend from 2024, accounting for approximately 20% of our deals and an increase in the number of hybrid facilities (incorporating both subscription line facility and NAV facility). While there is much talk in the wider fund finance market of alternate or non-traditional lenders becoming more prevalent in this space, our data shows that traditional lenders have financed the majority (more than 80%) of our NAV deals to date.
Similar to the amendments to subscription lines, 50% of the amendments to NAV lines we have worked on so far this year were to extend the term with the remaining 50% being to increase the facility.
Jurisdiction
Luxembourg remains the most favoured European jurisdiction, working on approximately 60% of all our new subscription line deals across our European offices, and approximately 80% of the new NAV facilities, with Cayman Islands remaining popular and renewed activity in the funds market in Ireland seeing some green shoots in terms of fund finance activity.
Sub Lines vs NAVs by Jurisdiction (European Market)
New NAV Deal Lenders in 2025 (European Market)
Traditional lenders have financed the majority (more than 80%) of our NAV deals to date, despite much talk of alternate or non-traditional lenders becoming more prevalent.
Capital Call Securitisation in Luxembourg
In the fourth quarter of 2024, our team supported a landmark deal, one of the very first capital call securitisations involving Luxembourg, as reported here: Maples Group Luxembourg Advises ICG on Innovative US$240 million Capital Call Facility Refinancing
This is an opportunity for us to share insights from that deal, discuss the potential of securitisation tools within the fund finance market and highlight key legal considerations.
The financing arrangement was structured as a traditional English law governed subline utilising a revolving facility. The transaction was meant to constitute a securitisation scheme solely under the EU and UK securitisation regulations1, i.e. a transaction where “the credit risk associatedwithanexposureorapoolofexposuresis tranched,havingallofthefollowingcharacteristics:(i) paymentsinthetransactionorschemearedependent upontheperformanceoftheexposureorofthepoolof exposures;(ii)thesubordinationoftranchesdetermines thedistributionoflossesduringtheongoinglifeof
1 Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (the "EU Securitisation Regulation") and the same as it forms part of domestic law of the UK by virtue of the European Union (Withdrawal) Act 2018 (the "UK Securitisation Regulation")
Arnaud Arrecgros
thetransactionorscheme;and(iii)thetransactionor schemedoesnotcreatecertainexposures”, given the presence of two tranches that were subordinated to each other (with the lender holding the senior tranche). Any payments due under the finance documents (principal and interest) would take priority ahead of all distributions. The transaction did not constitute a securitisation undertaking under the meaning of the domestic legal framework, i.e. the Luxembourg law of 22 March 2004 on securitisation, as amended (the "Securitisation Law"), which offers a robust, popular and flexible regime, but dedicated to local securitisation vehicles.
While this transaction did not offer exposure to third-party investors (with the lender and fund retaining the senior and junior tranches, respectively), there is a consensus in the market that broadly syndicated, publicly rated capital call securitisations could emerge in Europe, mirroring developments seen in the US market.
There is a consensus in the market that broadly syndicated, publicly rated capital call securitisations could emerge in Europe, mirroring developments seen in the US market.
The Added Value
One may wonder about the benefits of applying securitisation tools to subline arrangements compared to the traditional arrangements that have been popular in the fund finance space for the past decade. Securitisation features offer several critical advantages in the current market conditions, which explain the expressed appetite for such tools.
Securitisation can be applied at different levels:
• Borrower level: The securities assets consist of the fund's exposure to limited partners' unfunded commitments.
• Third-party lender level: The securitised assets will then consist of the lender's stake in the facility.
On the lender side, the use of structured finance tools allows institutional lenders to decrease the risk-weight of their subline products, circumventing the stringent Basel III regulatory capital requirements. This enables such institutional lenders to efficiently manage their balance sheet by alleviating the constraints bearing upon them. Any transaction involving the transfer and sale of the pool of originated loans (on arm's length terms) to a newly established and separate bankruptcy-remote vehicle, would effectively free up space on lenders' balance sheet for additional schemes, making this an incredibly valuable product for lenders.
To cope with the liquidity squeeze, the foregoing will allow the fund finance industry to reach new pools of investors, notably non-bank and institutional investors such as insurers. These investors are likely to find the underlying products, the limited partners' commitments whose default rate is deemed low, as a robust credit exposure and a low-risk asset class. The specific needs or expectations from various investor classes may be accommodated by determining the terms of the debt or equity instruments (notes, preferred equity instruments, etc.) to be issued by the securitisation vehicle, which will track the revenues generated by the underlying assets, but without necessarily sticking to such underlying assets' original terms.
From the sponsors' perspective, the foregoing will help satisfy the growing demand for liquidity in the subline space by increasing lenders' capacity to extend financing, often at a better price (for instance, by taking advantage of a listing or rating process). Capital call securitisations allow general partners and fund managers to move beyond the dependency on bilateral subscription facilities with banks and their funding solutions.
The Cost
Opting for a securitisation scheme within the scope of the UK Securitisation Regulation and the EU Securitisation Regulation means that several requirements must be complied with by the parties to the transaction. The two regulations are mostly consistent in this respect, and the main obligations would include: (i) an obligation to retain a minimum exposure of 5% of the material net economic interest in the securitisation at the level of the party designated as originator, i.e. the lender that originated the loans constituting the underlying assets or the sponsor; (ii) transparency requirements to be satisfied, in particular, by way of submitting detailed reports on a quarterly basis; and (iii) due diligence assessment requirements bearing on institutional investors. Therefore, the finance documents will include detailed representations, warranties, undertakings and covenants to frame such regulatory concerns.
This will require submission of a detailed transaction summary, including an overview of the main features of the transactions to the regulator. This may cause some confusion given the discrepancy between the various jurisdictions' interpretation of the terms of the regulations. In Luxembourg, the market position is to make a restrictive interpretation of contractual tranching (triggering the application of the EU Securitisation Regulation) and to interpret more broadly what constitutes legal tranching falling out of such scope, by relying on the detailed and comprehensive list of legal subordination cases set out in the Securitisation Law. On this basis, most standard subscription facilities, with a senior creditor being the thirdparty lender and the funds' investors as investors, would not constitute contractual tranching and trigger application of the EU Securitisation Regulation and the requirements set out therein.
Similarly, the local authority may take the view that a transaction does not fall within its jurisdictional scope, despite the contractual reporting obligations bearing on local parties. However, nothing prevents parties to a contractual transaction from agreeing to comply with said requirements on a voluntary basis, so as not to end up in default of the contractual obligations set out in the finance documents. While this may lead to some questioning from the local regulator, this has always been a streamlined process which, from our experience, can be completed smoothly.
Opting for a securitisation scheme within the scope of the UK and EU Securitisation Regulations means that several requirements must be complied with, including a minimum 5% risk retention, transparency obligations and due diligence assessments for institutional investors.
The Security Package
The security package securing the senior exposure would be the same as in the context of a traditional capital call facility and will capture the drawdown rights (the right to call unfunded commitments from the limited partners and any ancillary rights thereto, such as the right to enforce such funding obligation) and the collateral accounts where commitments must be funded. The security may be granted on a cascading basis where the need arises, in the presence of feeder funds and contractual or regulatory concerns preventing the granting of security directly to third-party lenders. In cases where the underlying assets are transferred to a separate bankruptcy remote securitisation vehicle, the security may be granted to it instead of a security agent or trustee acting for finance parties. As such, the use of securitisation tools does not necessarily entail an added level of complexity at the level of the structuring and setting up of the security package, and the techniques that have been developed over the past decade in the context of subscription facilities may be recycled.
Points of Attention
Securitisation applied to capital call financing is still in the early stages in our market, and the number of transactions is too limited to draw conclusions on market trends, each presenting its own set of characteristics. Professionals will pay particular attention to certain matters which will determine the framework within which such transactions will be implemented in the near future, and its reach.
There remain challenges to overcome, such as the definition of eligibility criteria, or the relative transparency compared to traditional asset classes. The adequacy of the terms of the fund documentation, broadly speaking, will be a key criterion to achieve better pricing. While rating agencies, the involvement of which would be key to make the best out of fund finance securitisations, will focus first and foremost on the due diligence at the level of limited partners' base (the nature - ideally, institutional investors such as large pension or sovereign wealth funds - the depth, the size and diversity as a means to circumvent concentration risk), particular attention will also need to be paid to the fund documentation. The adequacy of its terms will be a prerequisite. The lack of market standard 'bankable' wording, or transferability restrictions, potentially negatively affecting the enforceability of capital calls and drawdowns, would be crippling. Our role as local counsel to decipher complex funds' structures and sophisticated fund documents will be instrumental in such context.
Opportunities
Luxembourg has a lot to offer as a jurisdiction of choice for setting up securitisation vehicles. On top of its globally recognised financial sector, its flexible and businessoriented legal framework and its political stability, the welltested two-decades-old legal regime, the Securitisation Law, and its popular features, such as the possibility to easily create segregated compartments, to which a dedicated pool of assets and liabilities may be allocated, the legally enshrined limited recourse and non-petition features and its impressive and solid base of double tax treaties, are key assets. The recent modernisation of the framework, and in particular the possibility for Luxembourg-based securitisation vehicles to actively manage underlying assets consisting of credit risks, may help to address practical needs when it comes to the management of a pool of assets consisting of short term and revolving loans, such as sublines.
Arnaud Arrecgros +352 28 55 12 41 arnaud.arrecgros@maples.com
NAVigating the Next Fund Finance Rating Methodology Wave
Ana Lazgare
Net Asset Value (NAV) facilities have become an increasingly significant tool in the fund finance landscape, particularly for private equity and other alternative investment funds. Private equity NAV loans can be broken down into two main categories, “Primary NAV” such as NAV loans to buyout funds and “Secondaries NAV” which are loans secured by a portfolio of LP or fund interests.
There are many reasons why NAV facilities are an important tool; including to finance acquisitions, support underlying portfolio assets or follow-on investments and to provide essential liquidity solutions to refinance indebtedness or leverage the value of a fund's underlying assets. Primary NAV loans are used mainly towards the end of their lifecycle (when the investment period has expired and most capital commitments have been deployed).
Secondaries NAV loans can be used as acquisition finance or for managing other liquidity needs of the fund throughout the lifecycle of the fund.
As the market for NAV facilities expands, the relevance of obtaining ratings from established agencies (including Fitch Ratings, KBRA, among others) has grown and there is an increasing demand to obtain credit ratings on this asset class to assist both borrowers and sponsors in club facilities and to gain traction with institutional investors, including insurance companies. Ratings can also enhance marketability of a fund and can lead to more favourable borrowing terms.
NAV facilities are typically secured term loan or revolving facilities, extended to private capital funds or private equity fund borrowers, which are secured by the fund's cash flows and, in some instances, underlying investments. As such, the borrowing base is comprised of the fund's portfolio of assets and its value rather than the uncalled capital commitments. For NAV facilities, borrowing might occur either at the fund level itself, or below in a portfolio company holding vehicle or other intermediary entity, depending on the fund structure. There is no "one size fits all" for these kinds of facilities, which will highly vary depending on the fund structure, ownership of the portfolio assets, cash flows and distributions.
Ratings provide standardised risk assessments for NAV loans, which is particularly helpful for the institutional investors that are a growing part of the market. In our analysis the asset quality and LTV are primary drivers, but the importance of the structure and cash flow sweep mechanics should not be underestimated. The cash flow sweep and LTV triggers could make a significant difference in a transaction, as even in deals with good assets, strong performance could primarily benefit the equity at the expense of the loan if not properly structured. This is why we think that bottoms up cash flow analysis is so important.
Greg Fayvilevich Managing Director, Global Head Funds & Asset Management, Fitch Ratings
We have seen multiple rating agencies publish their methodology criteria due to the high demand from the market. KBRA rate both Primary and Secondaries NAV loans under its Investment Fund Debt Global Rating Methodology. Fitch Ratings rate Secondaries NAV loans under its Net Asset Value Finance Rating Criteria. Such comprehensive methodology focuses on several key factors which include, among other things:
i. Cash Flow Analysis: it is required to consider the expected project portfolio cash flow and the performance of the underlying assets together with the ability of the facility to withstand stress scenarios until maturity of the facility. This is one of the most important factors to consider in the methodology criteria and it has a critical determination on the rating. Fitch particularly uses its proprietary Private Equity Collateralised Fund Obligations model to project portfolio cash flow for Secondaries NAV loans.
ii. Asset Quality / Portfolio Diversification: credit rating agencies need to also analyse the quality and diversification of the portfolio, the underlying assets, sector exposure and geographic search. All else being equal, the more diversified portfolios, including loans that protect against a potential build-up of concentration over time, are likely to obtain higher ratings.
iii. Track Record / Management: another critical factor is to consider and evaluate the manager's track record, including its capabilities, historical performance, investment strategy and resources.
iv. Sources of Repayment: Rating agencies may also assess the availability of additional sources of repayment, such as uncalled capital commitments, liquidity facilities, facility amortisations and assets outside the collateral pool. Although as a NAV loan, the primary source of repayment is expected from the underlying assets that secure the transaction.
v. Structural Protections: evaluate the terms of the facility and the organisational documents of the fund together with the structural protections to mitigate risks (including LTV tests, cash sweep features, guidelines and conditions on new asset acquisitions and the crucial security package).
The structural protections of the facility is arguably one of the most important factors for legal practitioners and it is typically where we, as Cayman Islands counsel, support our clients in this context. Rating agencies (and for the purposes of this article, Fitch Ratings and KBRA) assess the fund documentation together with the credit and security agreements and parties then require legal opinions to support the structure. In terms of the security package, rating agencies evaluate the level of protection a fund offers to lenders, and they examine how this would impact the risk profile of the facility. The structural implementation requires a robust security package which can enhance the creditworthiness of a NAV facility reducing the risk of loss for lenders. The key aspects to consider are:
• SecurityoverSpecificAssets:this may include security over equity of the borrower and fund's equity interests in the holding companies of the underlying investments and / or security interests over the distribution accounts in addition to guarantees or equity commitment letters from the fund. This could, depending on the level of complexity, require an in-depth analysis of the structure of the fund and the multiple parties involved in the structure, requiring a tailor-made and sometimes multi-tiered security package.
We have seen a recent development in security packages, which in certain cases require the implementation of bankruptcy remote structures (which are structured to avoid the risk of substantive consolidation and would usually have at least one independent director or equivalent at the borrowing vehicle level) and the increased interest in golden share structures (with certain rights on specific matters required to protect the interests of the lender); both of which have been effectively implemented with a Cayman Islands SPV and are taken into consideration by rating agencies for their credit rating methodology in terms of bankruptcy remoteness.
We also note that some lenders seem to be relying solely on account security as part of their security package, but this is typically acceptable when dealing with top-tier or specialised managers who may have low LTVs and is determined by a lender's risk appetite.
• SpecificCovenantsandEventsofDefault:consider covenants that restrict the borrower (and group) with respect to incurring further debt, disposing of assets, maintaining certain financial ratios and reporting obligations as well as having multiple avenues for recourse in the event of a default that provide additional protection to lenders.
• Remedies for LTV Breaches: provisions that allow the manager to cure loan-to-value breaches by allowing managers to call additional capital from investors or presenting a remediation plan which facilitates the likelihood of full recovery for lenders.
In addition to the security package, it is equally important to consider the fund documentation and fund management and domicile. Agencies such as Fitch Ratings and KBRA consider factors such as regulatory compliance, legal framework, tax efficiency and the operational capabilities of the fund manager.
At KBRA, in the case of both Primary and Secondaries NAV loans, understanding the structure and security is fundamental to the ratings process, including how the structure protects the facility from underperformance or portfolio concentration within the underlying portfolio. KBRA will test the resiliency of a structure through cash flow analysis, which will consider various scenarios of underperformance in the collateral, both in the timing and amount received from distributions from the underlying portfolio. KBRA consider that such analysis is fundamental to the rating and has contributed to relative stability in ratings in our NAV loan portfolio to date.
Thomas Speller Global Head of Fund Finance ratings at KBRA
The rating agencies are quite familiar with the Cayman Islands, Luxembourg and Ireland as fund domiciles, which are three prominent jurisdictions for the establishment and management of investment funds. All jurisdictions have strong regulatory frameworks (albeit Luxembourg's regulations are more aligned with European Union standards, which may be more stringent in certain aspects) and offer tax efficiency with Cayman Islands' tax-neutral status or Luxembourg and Ireland's extensive network of double tax treaties, which are particularly attractive for funds seeking to maximise returns. Ireland is recognised for its robust regulatory regime, EU alignment and favourable tax environment, which makes it a well-known domicile for alternative investment funds.
We believe that, from a ratings perspective, the choice of domicile is significant. Fitch Ratings and other agencies are assessing the legal and regulatory environment of the fund’s jurisdiction, focusing on the enforceability of creditor rights and the ability to implement and enforce security interests, among other considerations. In an evolving NAV market, we expect ratings to become an increasingly important tool in the industry, from the perspectives of lenders, institutional investors, and sponsors, particularly with the use and implementation of a transparent methodology. The interplay between fund structure and fund domicile jurisdiction are the key factors considered by the rating agency methodology, which will remain central to the successful deployment of NAV facilities We are very much looking forward to continuing to assist clients in the implementation of these facilities from any one of these fund domicile perspectives.
Ana Lazgare
+44 20 7466 1665 ana.lazgare@maples.com
KBRA have now rated over 100 Primary and Secondaries NAV. In our portfolio we have generally observed stable to positive performance in ratings, and we expect the stable performance trend to continue as a result of the structural protections noted above, such as LTV triggers that protect against NAV deterioration, minimum asset count requirements that protect against portfolio concentration, and mandatory cash sweep requirements as transactions approach maturity. Additionally, the initial LTVs on transactions are largely modest and typically reflect the risk of the underlying portfolio, with more concentrated Primary NAV loans starting at around 10%-15% initial LTV, and Secondaries NAV, which are more diversified by nature, starting at around 30%-40%. These modest LTVs and strong structural protections have helped to maintain the resiliency of the asset class.
Thomas Speller Global Head of Fund Finance
ratings at KBRA
S&P Global Publishes
Methodology for Rating Subscription Lines Secured by Capital Commitmentsʼ
As financial institutions face capital constraints and regulatory scrutiny while insurance companies look to deploy capital in novel ways, the interest in ratings for subscription facilities has continued to grow. In August 2024, S&P Global ("S&P") published its "Methodology for Rating Subscription Lines Secured by Capital Commitments" in which S&P set out a methodology for rating certain subscription facilities where the following criteria is met:
• the facility benefits from a first priority perfected lien on a closed-ended fund's limited partners' ("LPs") capital commitments;
• the expected primary source of repayment is to be from calls on the LPs' undrawn capital commitments;
• the lender has direct access to all LP capital flows, either prior to a missed payment or after a missed payment; and
• all LP capital must flow through cash accounts over which the lender has a first priority perfected lien or cash accounts that are bankruptcy remote from the fund.
The methodology aims to provide a clear framework for assessing the creditworthiness of subscription facilities, ensuring that stakeholders can make informed decisions and appears to be consistent with the basic methodology that lenders have historically employed for risk assessment, structuring, and documentation concerning subscription facilities.
Micaela Wing
Key Criteria
S&P's methodology for rating capital call subscription facilities involves several key considerations:
1. Limited Partners' Capacity to Meet Capital Calls
The credit quality and diversity of the fund's investors are critical. A diverse and high-quality investor base reduces the risk of capital call defaults. S&P looks at the financial strength of the investors, their commitment to the fund and their historical behaviour in fulfilling capital calls. The analysis includes assessing the concentration risk, where reliance on a few large investors could pose a higher risk.
The extent to which the subscription line is overcollateralised by capital commitments is also a key factor. Higher overcollateralisation provides a greater cushion against potential defaults. S&P assesses the ratio of committed capital to the amount of the subscription line to ensure there is sufficient coverage. This analysis includes stress testing scenarios to evaluate how much buffer exists under adverse conditions.
The liquidity of the collateral, including the ease with which capital commitments can be converted into cash, is assessed. This involves evaluating the speed and reliability with which investors can be expected to meet capital calls. S&P considers historical data on investor response times and any potential legal or operational barriers to accessing committed capital.
2. Limited Partners' Willingness to Meet Capital Calls
The legal enforceability of capital commitments and the terms under which investors are obligated to fulfil their commitments are examined. This includes reviewing the subscription agreements, side letters and any other documentation that outlines the investors' obligations for any conditions or limitations that could affect the enforceability of the commitments.
The legal structure of the fund and the subscription line, including the jurisdiction and governing laws, are analysed to ensure enforceability. S&P examines whether the legal framework supports the fund's ability to enforce capital calls and whether there are any legal impediments including reviewing relevant case law and legal opinions that may impact enforceability. It is important to note that the Cayman Islands are a preeminent jurisdiction when it comes to having a robust legal framework in place that supports a fund's ability to enforce capital calls.
We place significant emphasis not only on the creditworthiness of the LP base, but also on the willingness of LPs to pay and the legal structure of the capital call transaction. We recognise that LPs may choose not to perform even if they are able to do so.
Andrey Nikolaev Managing Director, WE Banks and Alternative Funds, S&P Global
The fund's leverage ratios, including debt-to-equity and loan-to-value ratios, are analysed to assess financial stability. S&P also considers the fund's ability to service its debt under various economic scenarios.
Historical performance metrics, such as return on investment and cash flow generation, are reviewed. S&P looks at how well the fund has performed in the past and whether it has consistently met its financial targets. This analysis includes evaluating key performance indicators such as internal rate of return, multiple on invested capital and distribution to paid-in ratios.
3. Preliminary Anchor Rating
After the first two steps above of the analysis are undertaken, S&P gives an anchor rating which it will then stress test and adjust based on the following steps of analysis.
4. Modifiers
The fund's jurisdictional risk is crucial in determining the risk profile. Funds operating in countries with varying legal standards and protections or levels of transparency will of course have different risk profiles, and this is taken into account as part of the further analysis. Other vulnerabilities and strengths are also considered including certain vulnerabilities that could impede repayment of the facility in a timely manner or on the other hand, strengths that could aid timely repayment. Finally, a holistic analysis is also undertaken which captures a broader view of the creditworthiness of the fund.
5. Sovereign Risk
If the preliminary anchor rating on the facility is higher than the rating on the sovereign where the fund is domiciled, sovereign risk is incorporated. While the framework does not delve deeply into sovereign risk, this generally becomes a more significant issue when it pertains to a specific LP and involves considerations of sovereign immunity or enforcement challenges in a "foreign" jurisdiction.
6. Alternative Investment Funds ("AIF") Issue Rating
The fund's creditworthiness is emphasised at this step, indicating that if it surpasses the credit assessment previously determined, S&P will likely utilise its AIF Methodology for rating instead.
Rating Process
The rating process involves a detailed analysis of all the above criteria, which reflects the overall creditworthiness of the subscription line. S&P uses a combination of quantitative analysis and qualitative judgment to arrive at a final rating, ensuring that all relevant factors are considered.
Conclusion
S&P's methodology provides a structured approach to evaluating capital call subscription line facilities. By considering factors such as fund structure, capital commitment quality, collateral quality, legal and structural considerations, operational risk and financial metrics, S&P aims to offer a comprehensive assessment of the credit risk associated with subscription lines. This methodology helps investors and stakeholders make informed decisions regarding the creditworthiness of these financial products, ultimately contributing to a more transparent and stable financial market. It is also worth noting that others such as Moody's, Fitch Ratings and Kroll Bond Rating Agency have also developed methodologies for rating subscription facilities clearly demonstrating the market appetite for these ratings for the reasons mentioned in this article.
Micaela Wing
+1 345 814 5436
micaela.wing@maples.com
Unlocking Fund Finance Opportunities: The Impact of 2025 Amendments to Jersey Private Funds
Mark Crichton
The Jersey Private Fund ("JPF") is Jersey's most popular fund product, and consequently, the most likely type of Jersey fund for lenders to come across. Recent changes (effective 6 August) to the regulation of JPFs (the "2025 Amendments") will add further attractions to this product for managers, and therefore, the popularity of JPFs for Jersey funds will only increase. This article highlights the key benefits of these amendments.
JPFs – A Refresher
JPFs are regulated by Jersey's main financial services regulator, the Jersey Financial Services Commission (the "JFSC").
The JFSC publishes a guide called the Jersey Private Fund Guide (the "JPF Guide"), which sets out the requirements and steps to be authorised as a JPF, together with ongoing obligations.
JPFs are intended for a restricted circle of investors who are either 'professional investors' or 'eligible investors' (usually by committing at least GBP250K), and because of these restrictions, they are one of Jersey's more lightly regulated and quick to launch products.
Key Change 1 - Investor Limits
Previously, JPFs were only permitted to make 50 offers to potential investors. The 2025 Amendments have relaxed this so that any new JPF will not be subject to the 50 offer (and therefore, 50 investor) limit. The 2025 Amendments have also relaxed the rules relating to topping up and transfers (which now will also not impact the offer / investor count).
While of most interest to fund formation teams (as with most of the 2025 Amendments), one possible impact to fund financing transactions is in relation to representations and covenants: these should no longer refer to the offer limit for JPFs launched after 6 August 2025.
Key Change 2Expansion of Professional Investor Definition
The 2025 Amendments have added helpful crossreferences to UK and US definitions, to make operation easier for managers based in those countries or elsewhere.
The definition of "Professional Investor" under the JPF Guide now also includes:
a. a professional client within the meaning of the UK Financial Conduct Authority's Conduct of Business Sourcebook; and
b. "US accredited investor" within the meaning of "Accredited Investor" as defined by the U.S. Securities and Exchange Commission in rule 501 of Regulation D – Rules Governing the Limited Offer of Sale of Securities Without Registration Under the Securities Act of 1933.
Listing Debt / Interests
Previously, interests in JPFs could not be listed. However, interests may now be listed if they do not constitute an offer to the public
24-Hour Streamlined Authorisation Process
The JFSC has committed to a 24-hour turnaround time (starting from the receipt of a full application and the payment of their fees).
Previously, JPFs were only permitted to make 50 offers to potential investors. The 2025 Amendments have relaxed this so that any new JPF will not be subject to the 50 offer (and therefore 50 investor) limit.
Application to Changes to Current JPFs
It is possible for an existing JPF to benefit from the new regime by applying to the JFSC for an updated consent.
Any borrower wanting to take advantage of the new regime should first check their finance documents for any consent or notification obligations for making such an application (the consent a JPF receives from the JFSC being a document usually provided to lenders in satisfaction of CPs).
Conclusion
The 2025 Amendments are very positive for the Jersey funds industry and are most relevant to fund formation experts. However, it will also be helpful for fund finance specialists to be aware of the changes, both for understanding the structures involved in a transaction and because there are likely to be small variations to finance documents resulting from the changes.
For further details, please contact:
Mark Crichton +44 1534 671 323 mark.crichton@maples.com
Bankruptcy Remote Cayman Islands SPEs in Fund Financing Transactions
Bankruptcy remoteness refers to the structuring of a legal entity or arrangement to minimise the risk of being affected by the bankruptcy or insolvency of related parties, such as its parent company or affiliates. The term special purpose entity ("SPE"), also referred to as special purpose vehicle, is commonly used to describe entities with bankruptcy remote characteristics.
The Cayman Islands is a prominent jurisdiction for the establishment of SPEs, particularly in the context of structured finance, securitisation and capital markets transactions. In the case of an on-balance sheet SPE, the SPE remains part of the parent group and is therefore included within the parent group for accounting purposes. In such structures, the parent retains an ownership interest, but the SPE is structured to be bankruptcy remote – meaning its assets and liabilities are ring-fenced from the sponsor’s insolvency risk.
This differs from orphan, off-balance vehicles – the kind typically used in CLOs and other securitisation products whose shares are held on charitable trust by an independent third-party trustee. In the case of orphan vehicles, the entity is wholly independent and separate for accounting purposes. While this brings certain advantages, it may not always be appropriate or desirable, such as where the parent wishes to retain economic ownership and operational control.
Matthew Grenfell Travis Wood
Matthew St-Amour
We are continuing to witness a growing interest in the utilisation of bankruptcy remote SPEs, particularly in the fund finance market. The typical transaction involves the establishment of an SPE, the contribution of assets to the SPE from one or more upstream or affiliated entities and the ring-fencing of those assets through appropriate bankruptcy remoteness and SPE provisions. This enables lenders to finance those assets on more favourable terms than would have been possible at the parent level (due to the contagion of other assets and liabilities, or debt covenants or other factors that might prohibit or limit debt at the parent level). As the SPE remains a subsidiary of the parent group, unwinding the transaction is generally more straightforward. Upon repayment of the financing, assets can be distributed up the chain as needed.
How Bankruptcy Remoteness is Achieved Using Cayman Islands SPEs
The usual Cayman Islands vehicles used for SPEs are: (i) exempted limited partnerships; (ii) limited liability companies; and (iii) exempted companies. The approach to implementation differs across these three types of entities and the following section analyses the nuances of each vehicle and the interaction between them.
Exempted Limited Partnership
• Exempted limited partnerships ("ELPs") do not have separate legal personality and act through their general partner. Because ELPs do not have officers, the restriction on taking insolvency-related action (typically referred to as "Material Action" in credit documentation) which is key to bankruptcy remoteness is usually achieved by appointing an independent director or manager at the general partner level. This independent director or manager is then required to vote in favour of any Material Action (whether in relation to the general partner or the ELP) before it is taken.
• It is common to see both limited liability companies and exempted companies act as general partner of an ELP, but it is equally common for foreign entities to act as general partner. In such cases, how bankruptcy remoteness is achieved at the general partner level would not be a Cayman Islands matter, however it will be necessary for the partnership agreement to dovetail the foreign entity's constitutional or organisational documents.
We are continuing to witness a growing interest in the utilisation of bankruptcy remote SPEs, particularly in the fund finance market.
Limited Liability Company
• Limited liability companies ("LLCs") are a more recent and increasingly popular Cayman Islands vehicle, offering significant flexibility in governance and structuring. LLCs do not have shares; instead, members hold interests and the LLC is managed by one or more managers. While benefiting from much of the same flexibility as ELPs, a key difference is that LLCs, like exempted companies discussed below, have separate legal personality. This means that bankruptcy remoteness can be achieved at the LLC level without having to look behind to the status of the general partner or manager.
• Bankruptcy remoteness is typically achieved by appointing an independent manager with the authority to block the LLC from taking Material Action. However, if preferred, an independent membercould be appointed, or potentially a springingmember concept could be utilised, but generally we consider the independent manager concept to be the most familiar and routine to deploy for most clients.
Exempted Company
• Bankruptcy remoteness is typically achieved through the introduction of a "golden share" into the exempted company's structure. This is a special class of share, typically held on charitable trust by an independent third-party trustee, such as MaplesFS Limited, which gives the holder the exclusive right to veto any Material Action. Alongside the introduction of the "golden share", we often (but not always) see the appointment of independent directors, with the authority to block the other directors from taking certain Material Action.
Material Action
The term "Material Action" referred to above is intended to capture insolvency-related actions, as well as other "material" actions that could affect the continuation and existence of the SPE. The precise drafting varies from transaction to transaction and is often negotiated, but generally includes the following:
• the initiation of, or the giving of consent to, insolvency proceedings, or the entry into any compromise or arrangement with creditors;
• the consolidation or merger of the SPE, or registration by way of continuation as a body corporate, partnership or other form of entity in any other jurisdiction;
• deregistration in the Cayman Islands or strike off; and
• the appointment of a liquidator, provisional liquidator, restructuring officer or certain other officials which would be indicative of financial distress or insolvency.
Cayman Islands Counsel
The role of Cayman Islands counsel, as with other transactions, is to support and facilitate the implementation of the commercial terms. When a bankruptcy remote SPE is utilised, our role will extend to the drafting, negotiation and implementation of the amended constitutional documents that will create the bankruptcy remoteness. It is vital that Cayman Islands counsel understands how bankruptcy remoteness should be properly implemented as a matter of Cayman Islands law. We believe that experience always counts, but this is particularly true of these transactions.
In our view, early engagement with experienced Cayman Islands counsel is key, by both lender and borrower, so that all parties understand what is needed to implement the desired structure.
Maples Group
The Maples Group has established expertise in the implementation of both on-balance sheet and off-balance sheet SPEs. We are able to draw on our vast experience across an array of markets, including our market-leading securitisation and asset-based finance practices, and bring this to bear on the ever-evolving fund finance market.
The independent manager and director roles discussed above, and the golden share trustee role, typically require the engagement of an independent fiduciary services provider that will be tasked with appointing the independent manager or director or performing the function of third-party share trustee. Depending on the structure of the vehicle, a variety of services such as board support, appointment of anti-money laundering officers, regulatory (FATCA / CRS) and preparation of management accounts may also be provided by the independent fiduciary services provider.
The Maples Group’s fiduciary services team has extensive experience and market leading expertise in performing all these roles. Both from a legal and fiduciary perspective, the Maples Group has been at the forefront of bankruptcy remote structures in the Cayman Islands since their inception and we continue to work on the most innovative transactions across the market.
Conclusion
Bankruptcy remote transactions bring Cayman Islands structuring and legal considerations to the forefront, in contrast to other deals where these issues may be less prominent. It is essential to consider the structure at an early stage, clearly identify the objectives and engage in dialogue with Cayman Islands counsel to ensure the chosen vehicle and governance arrangements are fit for purpose. The Maples Group’s market-leading expertise across both our legal and fiduciary arms makes us the partner of choice for clients seeking to implement bankruptcy remote structures.
Matthew St-Amour +1 345 814 4468 matthew.st-amour@maples.com
Matthew Grenfell +1 345 814 5556 matthew.grenfell@maples.com
Travis Wood +1 345 814 6154 travis.wood@maples.com
Japanese Megabanks Cement Position in US Syndicated Loan Market
Japanese megabanks are becoming an increasingly dominant force in the US syndicated loan market, capitalising on both regulatory shifts in the US and a strategic pivot toward higher-yielding overseas assets.
According to recent data from the London Stock Exchange Group, Japan's "big three" banks—MUFG, Mizuho and SMFG— acted as lead arrangers on over 1,076 syndicated loans in the US in 2024, a 33% increase year-on-year and more than double the total a decade ago. The total value of these loans surged to US$269.8 billion, another record high. These figures reflect a significant shift in global lending dynamics. The three megabanks collectively arranged 23% of all US syndicated loans in 2024, up from just 12% a decade ago, and they are on track to break that record in 2025, with 412 transactions arranged in the first half of the year alone.
Nick Harrold
Lorraine Pao
The three megabanks collectively arranged 23% of all US syndicated loans in 2024, up from just 12% a decade ago, and they are on track to break that record in 2025, with 412 transactions arranged in the first half of the year alone.
Why now?
Several factors are at play:
• USbanksretreatingfrombalance-sheet-intensive lending: Post-Basel III and in the wake of the 2023 US regional bank crisis, American lenders are increasingly focusing on fee-generating, capital-light businesses like investment banking and wealth management. This has created white space for foreign banks willing to commit their balance sheets to traditional lending.
• Spreadsremainattractive: With interest rates still very low in Japan, syndicated loans—particularly those for leveraged buyouts—offer spreads of 300bps or more, creating a compelling yield premium.
• EstablishedU.S.platforms: Japanese banks have spent over a decade building up their North American franchises. MUFG's tie-up with Morgan Stanley, Mizuho's acquisition of RBS' US loan book and SMFG's alliance with Jefferies have laid the foundation for this growth.
Strategic Growth Through Lending Relationships
The surge in syndicated loan activity is more than a pursuit of yield—it represents a deliberate strategy by Japanese banks to deepen relationships with major US and global corporates. These mandates increasingly serve as a gateway into broader cross-border opportunities, including M&A advisory, structured finance and capital markets roles.
This shift reflects a more ambitious global posture from Japan's megabanks. Having laid the groundwork through platform acquisitions and long-term partnerships, they are now using syndicated lending as a cornerstone of a more integrated, full-service offering (at a time when many US and European banks are retrenching from capital-intensive business lines).
At the Maples Group, we continue to observe strong demand from Japanese financial institutions for US and cross-border lending platforms, with a sustained presence from the major Japanese banks as lead arrangers. This trend highlights Japan's growing influence in global private capital markets and demonstrates the shifting balance of influence in cross-border lending.
Lorraine Pao
+852 9842 1096 lorraine.pao@maples.com
Nick Harrold
+65 8482 7721
nick.harrold@maples.com
Global Expertise
Combining the Maples Group's leading finance and investment funds capability, our Fund Finance team has widespread experience in advising on all aspects of fund finance and related security structures for both lenders and borrowers.
We advise on issues relating to taking security over assets, including shares, limited partnership interests and other forms of securities issued by British Virgin Islands, Cayman Islands, Irish, Jersey and Luxembourg vehicles.
For further information, please speak with your usual Maples Group contact, or the following primary Fund Finance contacts:
Cayman Islands
Tina Meigh +1 345 814 5242 tina.meigh@maples.com
Anthony Philp +1 345 814 5547 anthony.philp@maples.com
Matthew St-Amour +1 345 814 4468 matthew.st-amour@maples.com
Robin Gibb +1 345 814 5569 robin.gibb@maples.com
Dubai
Manuela Belmontes +971 4 360 4074 manuela.belmontes@maples.com
Dublin
Sarah Francis +353 1 619 2753 sarah.francis@maples.com
Vanessa Lawlor +353 1 619 7005 vanessa.lawlor@maples.com
Alma O’Sullivan
+353 1 619 2055 alma.o'sullivan@maples.com
Hong Kong
Lorraine Pao +852 9842 1096 lorraine.pao@maples.com
Jersey
Mark Crichton +44 1534 671 323 mark.crichton@maples.com
London
Jonathan Caulton +44 20 7466 1612 jonathan.caulton@maples.com
Julia Cornett +44 20 7466 1610 julia.cornett@maples.com
Luxembourg
Arnaud Arrecgros +352 28 55 12 41 arnaud.arrecgros@maples.com
Yann Hilpert +352 28 55 12 58 yann.hilpert@maples.com
Singapore
Michael Gagie +65 9723 9872 michael.gagie@maples.com
