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 ?
The Treasury announced three measures jointly with the conservatorship decision: so-called keepwells, under which the Treasury committed to inject up to $100 billion of capital each into Fannie and Freddie as needed to ensure their positive net worth; a Treasury lending facility if needed; and a program under which the Treasury would purchase the GSEs' MBSs in the open market.
The real action here was the two $100 billion keepwells, which were meant to effectuate the now-explicit guarantee of GSE debt and MBS coverage--they would provide just-in-time capital injections as losses were realized and ensure that Fannie and Freddie had the financial ability to service their debt and insurance obligations.
The duty to update is only an opportunity to ** Bids can be improved by provide "new" information--i.e., providing construction and/or address new litigation or keepwell guaranties.