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.
References in periodicals archive ?
pdf (distinguishing guarantees from keepwell agreements and comfort letters).
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.