Finance Guarantee

Finance Guarantee uses

Some examples include a large corporation (the creditor) borrowing a significant amount of money from the market, backed by a guarantee from a large insurance company (guarantor). Another example might be a shipping company (the creditor) seeking a guarantee for the value of a shipment, backed by a guarantee from a maritime insurance company (guarantor). Financial guarantees are essentially insurance policies that guarantee that a debt will be paid if the debt issuer experiences financial difficulties. For large companies, financial guarantees are typically issued by insurance companies or other large, extremely stable financial companies, frequently a parent company for the benefit of a subsidiary. Financial guarantees can result in a higher credit rating, lowering the cost to the issuer.