For those new to Collateral Transfer, which is the correct technical term for the universally known, Leased Bank Guarantee, it is about one company, seeking to lease a Bank Guarantee, which will act as security to raise a line of credit, alluded to as Credit Guarantee Facilities. Therefore, in essence, no Leased Bank Guarantees, no lines of credit.
Thankfully, there are Providers and Provider Groups, who with there extremely large and varied asset portfolios are able to supply Bank Guarantees for the Collateral Transfer market. These Provider Groups are highly sophisticated investors, and have a presence in most global financial markets and are known as Hedge Funds, Private Equity Funds, Sovereign Wealth Funds, Larger Family Offices and some institutions that carry large cash balances.
The contract to lease a Bank Guarantee is alluded to as a Collateral Transfer Agreement, and is where a company who wishes to access a Leased Bank Guarantee, referred to as the Beneficiary, contract with a Provider who will instruct their bank to transfer a Bank Guarantee to the Beneficiary’s bank. The time period is usually for one year, and for this service the Beneficiary will pay the Provider a fee, known as the Collateral Transfer Fee.
In order to supply Bank Guarantees for Collateral Transfer, a Provider Group will use lesser performing assets such as a Long-Term Note, (LTN), which they will securitise for this purpose. The end result being the Provider Groups or Provider will receive an enhanced return on these lesser performing assets.
It cannot be stressed how important Provider Groups are to Collateral Transfer, and even more importantly their close relationship with IntaCapital Swiss, and without them, those companies enjoying access to loans and lines of credit, alluded to as Credit Guarantee Facilities, would now be struggling, possibly fatally.