Parental guarantee: Difference between revisions

{{g}}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]].