Parental guarantee: Difference between revisions

Parental guarantee (view source)

536 bytes added , 19 January 2021

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-{{g}}A [[parental guarantee]] is a [[guarantee]] from a [[parent]] (like, an actual parent: the bank of mum and dad) — but for our purposes more likely another affiliate in the same group, often the one that owns all or most of the equity in the party being guaranteed.
+{{a|banking|}}A [[parental guarantee]] is a [[guarantee]] from a [[parent]], which could be an ''actual'' parent — the bank of mum and dad, guaranteeing junior’s student loan — but for our purposes, more likely another credit-worthy [[affiliate]] in the same group, often the one that owns all or most of the equity in the party being guaranteed. Often your counterparty will be a financing subsidiary, created as a separate, thinly capitalised vehicle within the group for accounting, financial reporting and liability limitation purposes.
+A [[parental guarantee]] means that, should things go toes-up on your $500m [[revolving credit facility]], you have more to go at than a bunch of papers in the [[Cayman Islands]] with a share capital of ten bucks and a registered address at [[Ugland House]].
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