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Loan Portfolio Guarantee

Definition

The Loan Portfolio Guarantee (LPG) guarantees a portfolio of loans made by a partner to a target Borrower segment (Qualifying Borrowers) for which the parameters have been defined but the individual borrowers are not known.

Limit

The indicative limit for Loan Portfolio Guarantee is USD 10,000,000. However, AGF has the capacity to provide guarantee support for amounts higher than this limit, depending on among other considerations, the nature and type of support required.

Coverage Rate

AGF’s guarantee coverage rate is based on the principle of having a balanced sharing of risks between the Guaranteed Party and the Guarantor rather than a transfer of all the risks. This risk sharing model translates into a guaranteed maximum coverage rate of 50% of the financing involved subject to the guarantee type limits.

Exceptions to this rule are co-guarantee arrangements whereby for Loan Guarantees total coverage rate can go up to 75% of total financing.  

Tenor

Loans are covered for their full life, subject to a maximum of 10 years.

Currency

To avoid currency exposure, AGF will issue its guarantees in the currency of the underlying financing.

Pricing

AGF uses a Price-to-Risk model in arriving at the actual pricing for a guarantee facility to be availed to a particular financial institution. Pricing may vary across banks depending on the quality of the portfolio as measured by among others, the default rate.

Guarantee Type  Loan Portfolio Guarantee
Coverage* 50%-75%
Origination Fees  0.5%-1%
Utilization fees  1.75%-4%
Tenor  <= 10 years 
Limit  Flexible 

 

*Complimentary Capacity development on a 50%-50% cost sharing basis

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