Guaranteed debt
The Guaranteed Debt portfolio consists of guarantees granted by the Region, mainly to cover external financing (liabilities) of regional entities, whether consolidated or not.
In addition to the task of managing the Direct Debt portfolio, in 2014 the Debt Agency’s Front Office was entrusted with the management of the Guaranteed Debt portfolio. This is made up of regional entities for which the Brussels-Capital Region guarantees the financial obligations towards creditor institutions.
The Guaranteed Debt represented a volume of 3.23 billion as of 31/12/2021. Most of the consolidated debts at the regional entity level are guaranteed.
Any entity benefiting from a budget guarantee rider in the (initial or adjusted) expenditure budget of the Brussels-Capital Region may submit a guarantee application to the Front Office. To do this, complete and return the attached form at least 3 months prior to your funding need.
The Front Office will review your application as soon as possible based on the information and documents provided.
Please note that:
- Any request for a guarantee must be made on the basis of an existing budget rider ;
- All guarantee requests to the Front Office must be for liability coverage (external financing) ;
- The granting of a guarantee involves the invoicing of fees by the Brussels-Capital Region in relation to the risk profile of the entity requesting the guarantee ;
- All guarantee applications are reviewed using a standard methodology applied to all entities and based on a sound analysis of the entity’s risk profile ;
- All guarantee applications include a commitment by the entity to be monitored over time by the Front Office (monitoring meetings at least every six months).
Explanatory diagram of the processing of a guarantee application
Ratio of guaranteed debt
The Region’s actual exposure to guaranteed liabilities differs from the classic nominal value. The actual exposure corresponds to the reinvestment fee requested by the creditor in the event of default. The definition of the reinvestment fee depends on each contract but generally takes into account the nominal, the interest, the risk profile of the entity and the situation of the yield curve at the time of default. To estimate the actual exposure, the Front Office therefore calculates the discounted value of future financial flows. The graph above shows the link between present value and market rates.