Author： Soumaré Issouf Youbissi Fabien Gendron Michel
Publisher： Henry Stewart Publications
ISSN： 1752-8887
Source： Journal of Risk Management in Financial Institutions, Vol.4, Iss.2, 2011-03, pp. : 146-161
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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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