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Aval

   Also found in: Acronyms, Wikipedia 0.06 sec.
Aval
A guarantee added to a debt obligation by a third party who ensures payment should the issuing person default.

Notes:
The debt obligation could be a note, bond, promissory note, or draft. The third party providing the aval is usually a bank. Since avals can be forged, caution should be taken when accepting these notes. Banks usually only provide an aval to issuers with very good credit ratings.

The process of avalizing is performed mainly in Europe. In the United States, banks have restrictions as to what instruments may be provided an aval.


Aval
Term meaning inseparable from the financial instrument. This gives a guarantee and is abstracted from the performance of the underlying trade contract: Article 31 of the 1930 Geneva Convention of the Bills Of Exchange states that the aval can be written on the bill itself or on an allonge. US Banks are prohibited from avalizing drafts.

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The two organizations will serve approximately 50 of Latin America's leading financial institutions, including Bank of America, Citibank, BankBoston, Unibanco, Santander, ABN AMRO, Banamex, Grupo AVAL and Scotiabank Inverlat.
 
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