The Role Of Offshore Financial Centres In Global Private Credit ' What Makes The Offshore World So Appealing For Private Lenders And Borrowers?

• Published date: 27 March 2024
• Law Firm: Harneys
• Author: Mrs Michelle Frett-Mathavious

The role played by offshore financial centres (OFCs) in shaping global finance is significant and impacts upon private credit transactions in much the same way that it does traditional institutional lending. OFCs such as the British Virgin Islands (the BVI), the Cayman Islands and Anguilla add undeniable value to the international financial system and are widely known for their tax neutrality, business-friendly and well-regulated environment, well established legal systems and financial institutions as well as their efficient financial services. Feeding into that value add is their regular performance of an intermediary (cost-saving) function within the context of financial transactions and facilitation of global capital flows. In turn, this cross-border movement of capital supports much needed investment across the globe, in developed and developing economies alike.

Currently estimated to be valued at roughly US$1.6 trillion, the global private credit market is projected to top out over the coming year at about $2.8 trillion. The rise in global private credit (which refers to non-bank lending to companies), characterised largely by private equity funds, alternate investment funds, hedge funds and other entities operating as private lenders in a bid to fill a gap left by banks signifies quite convincingly its increased importance in the facilitation of global capital flows as well...