Hybrid Guarantees

Hybrid Credit Guarantees

A combination of individual and portfolio guarantees, incorporating elements of both approaches.

Key Feaatures
  • Risk is shared between the guarantor and lender, with coverage applied to individual loans within a portfolio.
  • Guarantees may have specific conditions for individual loans while being managed as part of a broader portfolio.
  • Often designed to target specific policy goals, such as promoting small business or green lending.
Examples
  • Partial credit guarantees where the guarantor covers a percentage of the loss for individual loans within a portfolio.
  • Development finance institutions combining portfolio guarantees with borrower-specific conditions.
Advantages
  • Flexible and adaptable to specific lending goals.
  • Allows risk sharing at both the individual and portfolio levels.
  • Can target specific sectors or policy priorities (e.g., microfinance, renewable energy projects).
Disadvantages
  • Complex to structure and administer.
  • Requires careful monitoring and risk management at both levels.
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