Skip to main content

Renewing Collateral Transfer Agreements

Renewing Collateral Transfer Agreements is possible and is often contracted by those companies looking to access lines of credit, or bank loans, alluded to as Credit Guarantee Facilities, that have been denied by traditional financiers. The acknowledged experts in this arena, are a Geneva based Boutique Finance Company, known as IntaCapital Swiss.

The agreement/contract is signed by two companies, where one company will lease a Bank Guarantee, known as the Provider, and other company who will receive the Bank Guarantee, known as the Beneficiary.

For further details on the Provider, please go to “Who Are Providers And What Are Their Benefits From Leasing Bank Guarantees

A Collateral Transfer Agreement can run for one year, or can run for up to and including seven years. If the Beneficiary has contracted for one year and decides they need to renew the contract for a second year, it is imperative that they inform IntaCapital Swiss as soon as possible, and no later than one month before expiry, as they will need to obtain the agreements of both the Provider and the Lender.

Where a Collateral Transfer Agreement runs for two years or more, the agreement will automatically rollover, however, a renewal will only be obtained providing all the Terms and Conditions contained within the agreement have been met.

There are always costs for the Beneficiary’s account when signing a Collateral Transfer Agreement, and these costs relate to, cost of borrowing for one year, the Provider’s fees, booking fees, legal fees, arrangement and due diligence fees. However, in years two up to seven, the only costs the Beneficiary has to bear are the Provider’s fees and one year’s cost of borrowing.

The Provider’s fees are usually fairly stable, where as the cost of borrowing can vary from year to year. Both 12-month Libor and 12-month Euribor are subject to market forces, and if at the time of renewing a Collateral Transfer Agreement, one year’s borrowings have increased, all costs will be for the account of the Beneficiary.