What is a cross corporate guarantee?

A cross corporate guarantee is a financial arrangement where two or more companies agree to guarantee each other's obligations, typically in relation to loans or credit facilities. This means that if one company defaults on its debt, the other companies involved in the agreement are responsible for fulfilling that obligation. This type of guarantee can enhance creditworthiness and improve access to financing for the companies involved, as lenders view the shared risk favorably. However, it also means that each company is exposed to the financial risks of the others.