Funding Terms

When a company wishes to lease a Bank Guarantee, like many companies before them, they will approach IntaCapital Swiss, who are acknowledged experts in Collateral Transfer and Collateral Transfer Agreements. IntaCapital Swiss will provide the counter-party to provide the Bank Guarantee, known as the Provider, for the company looking to lease or rent the instrument, known as the Beneficiary.

When engaging in a Collateral Transfer Agreement, it is usual for the Beneficiary to contract for a Bank Guarantee with an expiry date of one year, but it can be booked for two years up to an including seven years, with the Bank Guarantee rolling over automatically. However, if after one year the Beneficiary decides to rollover the Bank Guarantee into year two, they must inform IntaCapital Swiss at least one month before expiry, as they will have to obtain approval from both the Provider and the lender.

On signing a Collateral Transfer Agreement, the Beneficiary is committing themselves to pay certain cost and fees, such as the cost of one year’s borrowing, the Provider’s fees, booking fees, arrangement fees, due dilligence and legal fees. If the Bank Guarantee is rolled over into the second and subsequent years, the Beneficiary is only liable for the Provider’s fees and one year’s cost of borrowing.

From time to time the Provider’s fees may vary, but usually these fees are fairly static. However, the cost of borrowing from year to year may change, as 12 months Libor and 12 months Euribor are subject to market forces and any increase in interest rates will be for the Beneficiary’s account.