Collateral Value for Sureties in Pool Agreements 

Sureties are commonly used for contributing to pool agreements and can be assigned as least ranking or equal ranking members of pool agreements.

 

Features

In the standard system, the following conditions apply in scenarios where sureties are members of pool agreements:

●     If a single surety that is a pool member has no directly assigned receivables, then the sum of receivables is derived by calculating the sum of the indirectly (through pool agreement) assigned receivables

●     If sureties are members of pool agreements and also have directly assigned receivables, then the value of directly and indirectly assigned receivables is used for deriving the sum of receivables.

●     If a surety and pool agreement collateralize the same receivable, then the following conditions apply:

○     The collateral agreement – receivable assignment with the higher value is considered in the calculation of collateral value for the pool agreement.

○     The surety and pool agreement can collateralize different components or even portions of the same receivable. The sum of values of both the assignments is considered for performing calculations.

○     The scenario of overlapping middle portions of a receivable is not in the scope of Collateral Management.

●     The values for surety portions must be entered as amounts if a portion restriction exists for a portion of a surety.

●     Default liability sureties cannot be assigned as members of pool agreements.

●     Sureties cannot be members of pool agreements and back-up collateral at the same time.

●     Any restrictions on the portions of a surety must be accounted for during the assessment value calculation of the surety.

 

Example: Collateral value calculation when surety is member of a pool agreement

Entity	Calculated Value	Formula	Calculation Result
Fixed Liability Surety
	Assessment value	Minimum [Sum of contract capitals of receivables * (guarantee rate / 100)] and [Assessment amount]	2000
	Lending value	Assessment value	2000
	Lending limit	Lending value * lending rate / 100	2000
	Collateral right	Minimum [sum of collateralized receivable amount * (guarantee rate / 100)] and [Assessment amount]	2000
	Collateral value	Minimum [(lending limit – special discount) (collateral right)]	2000
Pool agreement
	Collateral right	Minimum [(sum of receivables) – (amount assigned from other single collateral agreements not assigned to pool agreement)] and [(sum of collateral values of single collateral agreement portions assigned to the pool agreement)]	1000
	Apportioned value (allocation of portion values for surety)	Collateral value * portion value % / 100	Surety portion1 = 1000 Surety portion2 = 1000
	Contributed collateral value (contribution from surety)	Collateral value of apportioned amount linked to collateral pool) * (collateral right of pool agreement / sum of collateral values of agreement portions linked to pool)	1000
	Collateral value	Sum of collateral values of single collateral agreement portions (which are contributed to the pool agreement)	1000