Investor Glossary-keepwell agreementInvestor Glossary-keepwell agreementInvestor Glossary-keepwell agreementInvestor Glossary-keepwell agreementInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Keepwell Agreement

The HTML to link to this page
 

A keepwell agreement is a contract between a parent company and one of its subsidiaries which guarantees that the parent company will provide all necessary financing to the subsidiary for a pre-determined period of time. The idea behind a keepwell agreement is to make the subsidiary company appear more creditworthy in the eyes of banks and other lenders. Without a keepwell agreement a small subsidiary might have trouble securing additional financing. Since the keepwell agreement acts as a financial guarantee, obligating the parent company to provide consistent funding, banks and other financial institutions feel more confident making loans with a keepwell agreement in place. Likewise, due to the financial obligation placed on the parent company by a keepwell agreement, the subsidiary company may enjoy a better credit rating than would be possible without a signed keepwell agreement.



Rate this Keepwell Agreement definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: stock market close, quality assurance, reverse mortgage, Key Rate Duration, annual return, option premium, in escrow, VIX, Zero Cost Collar, ex-dividend date, deferred tax, limit order, cancelled check, open position, current ratio, labor relations, margin rate, wholly-owned subsidiary, retained earnings, implied volatility, diluted share, LIBOR, debt service coverage, APR, dividends payable, class C shares, liquidity ratio, 144a, minority interest, 1031 exchange, deferred revenue, inflation, covered put, balance sheet, phantom income, per diem, 401a, average price per share, risk management, required rate of return, FTSE, irrevocable trust, FICO score, stock split, EBITDA, ex-dividend, real GDP, 1035 exchange, command economy


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use