Who Are Providers And What Are Their Benefits From Leasing Bank Guarantees?
Providers are usually sophisticated investors, can be found in the financial centres throughout the world and are major players in the many different financial markets. What binds these companies together are their huge balance sheets, and are usually recognised as, Sovereign Wealth Funds, Private Equity Funds, Hedge Funds, Larger Family Offices and institutions that tend to be cash rich.
These Provider groups have access to a vast array of assets which they can use as collateral to provide Bank Guarantees, for leasing or Collateral Transfer, which is the correct technical term. Therefore, if a company is looking to lease a Bank Guarantee, they will have to find as explained above, a Provider or a Provider group, and enter into a Collateral Transfer Agreement.
A Collateral Transfer Agreement is where the Provider enters into a contract with another company, (referred to as the Beneficiary), and rents or leases a Bank Guarantee for a limited period of time, usually one year. The benefit to the Provider is a fee paid to them by the Beneficiary for the use of the Bank Guarantee. This fee, under the Terms and Conditions of the Collateral Transfer Agreement, is referred to as the Collateral Transfer Fee.
When leasing a Bank Guarantee the Provider will look at their asset base, and if they have relative underperforming assets, such as a Medium-Term Note, (MTN), which carries a low interest rate or coupon, they will use this asset as security to lease a Bank Guarantee and enjoy a much higher return.
Many companies throughout the world are finding it very difficult to access credit facilities. IntaCapital Swiss with their unique access to Providers and Provider Groups, utilise Leased Bank Guarantees through their Collateral Transfer Facility, providing access to loans and lines of credit, referred to as Credit Guarantee Facilities, for those companies being refused credit facilities by traditional lenders.