EDC performance security guarantee
The Account Performance Security Guarantee (APSG) is an Export Development Canada product that gives a company’s lender a guarantee on bonds, letters of guarantee and standby letters of credit. EDC describes it as collateral replacement for letters of guarantee; its page does not present it as a loan to fund a purchase.
A contractor or exporter that buys a business may meet this term when a lender asks how bonds or letters of guarantee will be backed. EDC says an APSG allows a company to issue letters of guarantee through its financial institution without needing to put up assets as collateral. Its page is written for exporters, so check that the product fits the business you are buying.
How it differs from other EDC products
EDC’s Export Guarantee Program provides guarantees to a company’s financial institution so it can extend working capital. EDC’s surety bond insurance is separate again: EDC says it can reinsure a surety company against losses if a customer demands payment against a surety bond. See the entries on the export guarantee program and surety bond.
What to ask
- Whether the target’s existing bonds or letters of guarantee rest on an APSG
- Whether the lender and EDC will keep the guarantee in place after a change of ownership
- What happens to instruments still outstanding at closing
For EDC and acquisition funding more broadly, see can EDC finance the purchase of a business.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Export Development CanadaGovernmentAccount Performance Security Guarantee
- 02Export Development CanadaGovernmentExport Guarantee Program
- 03Export Development CanadaGovernmentSurety Bond Insurance
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