Keepwell Agreement

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Keepwell Agreement

An agreement between a parent company and a subsidiary in which the parent company provides a guarantee on the subsidiary's debt for the duration of the agreement. The keepwell agreement reduces the risk to the subsidiary's debt securities and may be beneficial for its stockholders.
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pdf (distinguishing guarantees from keepwell agreements and comfort letters).
Hollywood deals: soft contracts for hard markets
The senior unsecured debt ratings of Sojitz subsidiaries supported by keepwell agreements have also been upgraded to B1 from B2, Moody's said.
A keepwell agreement is a contract between a parent company and a subsidiary to maintain solvency and financial backing throughout the term set in the agreement.
Moody's upgrades Sojitz's long-term debt rating
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