Bank Guarantees received under Collateral Transfer facilities emerge as powerful tools, enabling the securing of lines of credit with strategic advantages. Understanding the intricacies of this process is key to harnessing its full potential.
Securing Lines of Credit with Bank Guarantees
Typically, mainstream banks readily embrace the concept of offering credit against Bank Guarantees obtained through Collateral Transfer facilities. This avenue allows borrowers to secure credit up to 100% of the face value of the Guarantee, deducting advance interest charges and bank fees. However, lending rates commonly hover between 80% to 90% of the face value. The credit term aligns with the Guarantee’s duration, usually ranging from 1 to 5 years, ensuring a synchronized approach.
Issuance and Acceptance Protocols
Bank Guarantees issued under these facilities adhere to stringent protocols, specifically URDG758, ensuring widespread acceptance by mainstream banks. Referred to as ‘letters of Guarantee’ or ‘credit facilities Guarantee,’ these instruments are more accurately termed ‘Demand Guarantees.’ It’s crucial to recognize that utilizing a Guarantee to secure a line of credit or loan incurs interest charges in addition to the standard Contract Fee. International bank lending rates for such secured loans typically range from 3.00% to 4.00% annually, varying by jurisdiction and currency. Redeure facilitates lending in Swiss Francs, Euro, and GB Sterling, linked to either EURIBOR or LIBOR rates.
Suitability and Duration Considerations
These facilities are ideally suited for financial requirements spanning terms under 5 years, particularly where returns are robust, justifying higher annual rates. While terms exceeding 5 to 7 years are achievable, Collateral Transfer facilities become less suited, and caution is advised.
Redeure: Your Partner in Financial Expansion
Redeure steps in to assist clients in raising credit against Guarantees when their own banks decline lending facilities. With robust relationships with understanding banks and private equity groups, we offer expanded lending opportunities. It’s important to note that additional fees apply for utilizing our services to obtain credit lines. Moreover, Redeure can facilitate the opening of banking and lending facilities for selected clients through direct introductions to appropriate banks.
Explore the boundless possibilities of leveraging Bank Guarantees with Redeure—your strategic partner in financial growth. Contact us to embark on a journey of financial expansion and secure your credit needs with confidence.
