Comparative analysis of multiple-guarantor agreements
Abstract
Co-guarantor agreements are compared with independent-guarantor agreements. With co-guarantor agreements, the guarantor is more strongly affected by changes to project assets or to guarantor assets. These agreements seem more advantageous to creditors because of the diversification effect, ie each guarantor must consider not only its own ability to repay the loan but also the repayment capacity of other guarantors and the borrower. With both types of agreement, loan pricing is mainly determined by the risk inherent in project assets or guarantor assets, much more so than by similarity in asset characteristics among guarantors or by similarity in asset characteristics between guarantors and projects.
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Author's Biography
Issouf Soumaré is Associate Professor of Finance and Managing Director of the Laboratory for Financial Engineering at Laval University, Canada. His research and teaching interests include risk management, financial engineering and numerical methods in finance. He co-authored the book ‘Stochastic Simulation and Applications in Finance with Matlab Programs’ (Wiley). His theoretical and applied financial economic works have been published in leading international economics and finance journals. Issouf holds a PhD in business administration in finance from the University of British Columbia (Canada) and is also a certified Professional Risk Manager and Financial Risk Manager.
Fabien Youbissi held his first banking position as a manager in the Analytics and Structured Transaction group at Scotia Bank from November 2006 to June 2007. He subsequently joined the newly created Hedge Funds Analytics group of the same company and was promoted to Senior Manager in May 2009. In September 2010, Fabien joined the Capital Markets division of BMO Financial Group as Vice President of Structured Finance Risk Management, looking after prime brokerage portfolios. He has a PhD in applied mathematics and a master’s in financial engineering (both from Laval University, 2006).
Michel Gendron is head of the Department of Finance, Insurance and Real Estate at Laval University. He is also the founder and director of FSA Trading Rooms. He obtained a PhD in finance from the University of British Columbia and his work has been published in many finance and insurance journals, including The Journal of Finance, European Journal of Finance, Journal of Financial Research, The Journal of Fixed Income, Insurance: Mathematics and Economics, Geneva Papers in Risk and Insurance Theory and The Journal of Risk Finance.
Citation
Soumaré, Issouf, Youbissi, Fabien and Gendron, Michel (2011, March 1). Comparative analysis of multiple-guarantor agreements. In the Journal of Risk Management in Financial Institutions, Volume 4, Issue 2. https://doi.org/10.69554/RGST4145.
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