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Resource Mobilization Guarantee

Definition

The Resource Mobilization Guarantee (BFG) guarantees bonds issued by a Partner Lending Institution to investors for whom the parameters have been defined but the individual investors may not be known for the purpose of raising long term resources to finance SMEs.

Limit

The indicative limit for Resource Mobilization Guarantee is USD 1,000,000. 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 and resource mobilization guarantees which can go up to 75% and 100% respectively.  

Tenor

Except for short term loans of up to 2 years which are covered for the full life of the loan, guarantees have tenors not exceeding 80% of the tenor of the underlying financing, subject to a maximum of 10 year.

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. Below are indicative prices of guarantees: 

 

Loan Guarantees

Facility Fee

Utilization Fee

Resource MobilizationGuarantee

1.00%

2.50%

 

Video Gallery
AGF Training - Credit Bank Limited
October 2016
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8th June 2017
2016 AGF Annual Report
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