guarantor

noun
guar·​an·​tor | \ ˌger-ən-ˈtȯr How to pronounce guarantor (audio) , ˌgär-, ˌga-rən-; ˈgar-ən-tər, ˈgär-, ˈga-rən- How to pronounce guarantor (audio) \

Definition of guarantor

1 : one that gives a guaranty (see guarantee entry 1 sense 3)
2 : one that guarantees

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Synonyms for guarantor

Synonyms

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Examples of guarantor in a Sentence

the town police force is the guarantor of our safety
Recent Examples on the Web Yet this guarantor of deferred gratification turned out to be better at promising than following through. The Economist, "Darwin was more Christian than he thought," 29 Aug. 2019 Many people who once saw the state as a guarantor of stability and growth now see it as a threat. The Economist, "Repression in Russia no longer works as well as it did," 5 Sep. 2019 Harder said that Trump was the only guarantor of the loans in question. CBS News, "MSNBC's Lawrence O'Donnell retracts story on Trump finances after Trump lawyers threaten to sue," 29 Aug. 2019 Extralegal violence was one guarantor of order, or at least the order the white South deemed necessary. Drew Gilpin Faust, The Atlantic, "Race, History, and Memories of a Virginia Girlhood," 18 July 2019 The United States previously pushed back against Bahrain on human rights matters, using its influence as the island's defense guarantor, with over 7,000 U.S. troops attached to a sprawling base in Manama that hosts the Navy's 5th Fleet. Fox News, "Bahrain prosecutors charge 169 over alleged militant ring," 25 Sep. 2018 But bringing down the sticker price is the ultimate guarantor of market success, and the big driver there is battery costs. David Roberts, Vox, "China made solar panels cheap. Now it’s doing the same for electric buses.," 24 July 2018 The statement adds that ARK Group is hopeful that Big Beat Dallas and the lease guarantor, Restaurants Unlimited, will work out a plan to resume operations. Robert Philpot, star-telegram, "Something big is going to stop beating at Toyota Music Factory (update No. 2)," 29 May 2018 But polls show Putin still has the support of most Russians of all age groups, who see him as a guarantor of prosperity, stability and security in the face of an increasingly threatening West. Amie Ferris-rotman, Anton Troianovski, Philly.com, "Russian police detain more than 1,300 protesting against Putin," 5 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'guarantor.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of guarantor

circa 1828, in the meaning defined at sense 1

History and Etymology for guarantor

see guaranty entry 1

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Statistics for guarantor

Last Updated

2 Nov 2019

Time Traveler for guarantor

The first known use of guarantor was circa 1828

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More Definitions for guarantor

guarantor

noun

Financial Definition of guarantor

What It Is

In general, a financial guarantee is a promise to take responsibility for another company's financial obligation if that company cannot meet its obligation. The entity assuming this responsibility is the guarantor.

How It Works

Let's assume XYZ Company has a subsidiary named ABC Company. ABC Company would like to build a new plant and thus would like to borrow $10 million from a bank. The bank will probably require XYZ Company to provide a financial guarantee of the loan. By doing so, XYZ Company becomes a guarantor -- it agrees to repay the loan using cash flows from other parts of its business if ABC Company is unable to generate enough cash on its own to repay the debt.

Often a parent company will offer a financial guarantee of bonds issued by one of the parent's subsidiaries, but there are plenty of other situations that might involve guarantees. For example, vendors sometimes require customers to become guarantors if the vendor is uncertain about the customer's ability to pay (this most often happens in transactions involving expensive equipment or other physical property). In these situations, a customer's bank might be a guarantor of the customer's payment, meaning that the bank will pay the vendor if the customer does not.

Financial guarantors don't always guarantee the entire amount of a liability. In bond issues, for example, the financial guarantor might only guarantee the repayment of interest or principal, but not both. Sometimes more than one company can be the guarantor on a security; in these cases, each guarantor is usually only responsible for a pro rata portion of the issue, but in other cases, each guarantor may be responsible for the other guarantors' portions if they also default on their responsibilities.

Railroad companies are well-known for their guaranteed bonds because in order for a railroad company to lease another company's railroad, the lessee must often guarantee the debt of the lessor.

Why It Matters

Financial guarantees mitigate risk, but it is important to note that they do not make a security risk-free. After all, it is still possible that even the guarantor can default on the liability if the liability is too large or if the guarantor is already struggling for other reasons. Regardless, guarantees provide an extra layer of security, which is why guaranteed securities often get higher credit ratings.

Historically, financial guarantors disclosed the nature and size of their guarantees in the notes to their financial statements. It is important to note that guarantees issued between parents and their subsidiaries do not have to be booked as balance sheet liabilities. Examples of this include a parent's guarantee of a subsidiary's debt to a third party or a subsidiary's guarantee of the parent's debt to a third party or another subsidiary.

All financial guarantees must, however, be disclosed. The guarantor must disclose the nature of the guarantee (terms, history, and events that would put the guarantor on the hook), the maximum potential liability under the guarantee, and any provisions that might enable the guarantor to recover any money paid out under the guarantee.

Source: Investing Answers

guarantor

noun
How to pronounce guarantor (audio) How to pronounce guarantor (audio)

English Language Learners Definition of guarantor

finance : a person who promises to pay back a loan if the original borrower does not pay it back

guarantor

noun
guar·​an·​tor | \ ˌger-ən-ˈtȯr How to pronounce guarantor (audio) , ˌgär-\

Kids Definition of guarantor

: a person who gives a guarantee

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guarantor

noun
guar·​an·​tor | \ ˌgar-ən-ˈtȯr, ˌgär-; ˈgar-ən-tər, ˈgär- How to pronounce guarantor (audio) \

Legal Definition of guarantor

: one that makes or gives a guaranty

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