We are often asked whether Irish funds can provide guarantees.
We set out a brief (and hopefully helpful) summary of this issue
below.
An Irish fund can provide guarantees or security (hereinafter
referred to as "credit support") in respect of any 100%
owned subsidiary. In the Irish fund finance sector, we would see
such credit support provided relatively frequently within regulated
fund group structures.
However, the AIF Rulebook issued by the Central Bank of Ireland
restricts an Irish regulated fund from acting as a guarantor on
behalf of third parties. The reference to "guarantor" in
the Rulebook is not defined and so it potentially extends to all
forms of credit support.
We are frequently seeing fund groups which contain certain
entities that are not fully grouped with an Irish regulated fund or
sub-fund. For example, the structure could contain an orphaned
Irish special purpose vehicle ("SPV")
that is usually financed by way of debt instruments (such
