Bank Guarantees received under Collateral Transfer facilities may be used to secure lines of credit. Typically, a bank will have no objection to offering credit against Bank Guarantees received in this manner up to 100% of face value, less of course advance interest charges and bank fees. However, typical lending rates will be around 80% to 90% of face value. The total credit term can be for the duration of the Guarantee, usually 1 to 5 years, but of course will not exceed the expiry term of the Guarantee.
How are Bank Guarantees issued?
The Guarantees that are issued under these types of facilities are worded specifically to secure credit lines. Guarantees are issued under URDG protocols (currently URDG758) and are readily accepted by most main stream banks. They are referred to as a ‘letter of Guarantee’, ‘credit facilities Guarantee’ Correctly, they are called ‘Demand Guarantees’. It is important to recognise that by using a Guarantee to secure a line of credit or loan, interest charges will apply in addition to the normal Contract Fee. From our experience, international bank lending rates for loans secured against such high-quality security tend to be in the region of 03,00% to 04,00% annually. This will of course differ in certain jurisdictions and currencies. We can facilitate lending in Swiss Francs, Euro and GB Sterling that are linked to either EURIBOR or LIBOR rates.
These facilities suit financial requirements for terms under 5 years or where returns are high, allowing higher expenditure on annual rates. The longer the term, the less suited Collateral Transfer facilities are and therefore we discourage terms in excess of 5 to 7 years, although they are achievable.
Bank Guarantees issued with the assistance of IntaCapital Swiss
IntaCapital Swiss can assist its clients in raising credit against Guarantees of this type in the event that our clients own bank declines to offer lending facilities. We hold strong relationships with understanding banks and private equity groups who look to expand lending opportunities in this area. It should be noted however that additional fees will apply if you utilise our services to obtain credit lines. IntaCapital can also assist with the opening of banking and lending facilities for its selected clients by direct introduction to an appropriate bank.