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Types of contingent funding

LETTERS OF CREDIT

A guarantee from a bank with a strong credit rating to make a payment to the scheme on certain pre-agreed trigger events, in return for a premium from the sponsor.

SURETY BONDS

Similar to letters of credit, however the guarantee is provided by an insurer instead of a bank.

Case studies

Using Asset Backed Funding to optimise the sponsor’s regulatory capital requirements while maintaining covenant.

Using a letter of credit to justify a “Bespoke” approach to funding.

Using a Group Company Guarantee to provide mitigation for adverse covenant effects of an M&A.

Using a range of contingent funding options to facilitate an appropriate investment strategy by assessing member outcomes in the context of covenant and funding.

Leveraging letters of credit to mitigate private equity risk

Negotiating profit sharing mechanisms and negative pledges to support refinancing and Covid-19 contribution deferrals.