RISK INSTRUMENTS AND FINANCIAL GUARANTEES

A Financial Surety Bond (Financial Guarantee) is created when a Funder agrees with a Borrower to repay a financial obligation at some agreed to future date. In the case of an Investor, the Investee agrees to redeem the investor’s preference shares at some agreed future date.

To achieve the above outcome the Funder and or Investor is provided with additional security by way of a non-cancellable Surety, to promptly receive payment of the agreed amount on the agreed future date should the Borrower default in its obligation to do so.

The Funder/Investor is protected by the above Surety in the event that the Borrower defaults (does not perform his obligation of making the agreed payment on the agreed date) or the Borrower cannot perform his obligations because of insolvency.

Equilinx utilises Financial Guarantees in many of the “financial solutions” it creates for and on behalf of clients should the transaction warrant it.

Financial Guarantees are used where they will:

  • Result in significant transactional cost efficiencies
  • Enhance the commercial viability of a proposal to make it more attractive as a funding proposition to Investors and or Lenders
  • Enhance the commercial viability of a proposal by increasing its strength and security
  • Provide additional security to the Lender/Investor